Barbara J. Abadi

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UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NEW YORK
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In re:
Barbara J. Abadi,
Debtor.
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Chapter 7
Case No.: 24-42873-jmm
MEMORANDUM DECISION SUSTAINING THE CHAPTER 7 TRUSTEE’S OBJECTIONS TO
HONEEDEW INVESTING LLC’S PROOFS OF CLAIM AND ORDER RECLASSIFYING,
REDUCING AND ALLOWING PROOFS OF CLAIM
Eric S. Medina
MEDINA LAW FIRM LLC
641 Lexington Avenue
Thirteenth Floor
New York, NY 10022
Counsel for Honeedew Investing
LLC
Norma E Ortiz
ORTIZ & ORTIZ, LLP
287 Park Avenue South
Suite 337
New York, NY 10010
Co-Counsel for Honeedew
Investing LLC
Kathleen Aiello
Kevin Collins
KLESTADT WINTERS JURELLER
SOUTHARD & STEVENS, LLP
200 West 41st Street
17th Floor
New York, New York 10036-7203
Counsel for Eric Huebscher,
Chapter 7 Trustee
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INTRODUCTION
Honeedew Investing LLC (“Honeedew”) has been attempting to collect a multi-million
dollar judgment against Barbara J. Abadi (“Barbara”) and Carlos A. Abadi (“Carlos” and together
with Barbara, the “Debtors”), since 2017. Part of those efforts included commencing actions in
Argentina to obtain recognition of Honeedew’s New York state court judgement and Argentina’s
equivalent of a judgment lien on the Debtors’ Argentinian condominium. In 2024, the New York
state court held the Debtors in civil contempt and directed the Debtors be imprisoned until they
paid the amounts owed to Honeedew. The Debtors filed these chapter 7 cases to obtain the
protection of the automatic stay and release from prison.
Honeedew has been active in these chapter 7 cases. Among other things, Honeedew filed
proofs of claim in the Debtors’ bankruptcy cases asserting general unsecured claims in excess of
$15 million and elected Eric Huebscher (the “Trustee”), as the chapter 7 trustee for the Debtors’
bankruptcy estates.
The Trustee marketed the Debtors’ condominium and accepted a $900,000 offer.
Honeedew then filed amended proofs of claim asserting that its claims are partially secured by
liens on the condominium and objected to the Trustee’s proposed sale.
The Trustee objected to Honeedew’s amended proofs of claim seeking to reduce the proofs
of claim from over $15 million to approximately $7.5 million and to reclassify the claims from
partially secured to unsecured. The Trustee argues the claims are unsecured because Honeedew
failed to obtain security interests in the condominium under Argentine law or to assert its secured
claims in timely filed proofs of claim. Further, the Trustee argues that Honeedew should be
equitably estopped from asserting security interests in the condominium because the Trustee
reasonably relied on Honeedew’s representations in its proofs of claim that its claims were
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unsecured and the estates would be prejudiced if Honeedew were permitted to assert secured
claims now. Lastly, the Trustee argues that Honeedew has overstated the amount of its claims.
Honeedew argues its interests in the condominium are valid and enforceable, the amount
of its claims are supported by judgments entered against the Debtors, and its secured claims are
timely because they were asserted in proofs of claim that amend timely filed proofs of claim.
For the reasons set forth below, the Court finds that, to the extent Honeedew’s claims are
secured by interests in the Debtors’ condominium, Honeedew waived those security interests by
its actions in the Debtors’ bankruptcy cases. Those actions include amending the proof of claim
filed in Barbara’s bankruptcy case to disavow its secured claim, filing an unsecured claim in
Carlos’ bankruptcy case, electing the Trustee as the permanent trustee in both cases, and waiting
more than one year to amend its proofs of claim to assert secured claims. Further, the Court finds
the state court judgments upon which Honeedew relies to establish the amount of its claims entitle
Honeedew to assert claims against each Debtor for $7,547,508.70, not $15,961,554.70. Therefore,
the Trustee’s claim objection is sustained and Honeedew’s proofs of claims are reclassified,
reduced, and allowed as general unsecured claims of $7,547,508.70.
JURISDICTION
The Court has jurisdiction over this contested matter pursuant to 28 U.S.C. § 1334(b), 28
U.S.C. § 157(b)(2), and the Eastern District of New York Standing Order of Reference, dated
August 28, 1986, as amended by the Order, dated December 5, 2012. The Court may hear and
determine this contested matter because it is a core proceeding under 28 U.S.C. § 157(b)(2)(B).
This decision constitutes the Court’s findings of fact and conclusions of law to the extent required
by Rule 7052 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”).
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PROCEDURAL BACKGROUND
On February 9, 2026, the Trustee objected to proofs of claim filed by Honeedew seeking
to reduce and reclassify those claims as general unsecured claims. Ch. 7 Tr.’s Object., Seeking
Entry of Order, Pursuant to 11 U.S.C. §§ 105, 502, 506, and Fed. R. Bankr. P. 2007, Reclass. and
Reduc. Proofs of Claim Filed by Honeedew Against Debtors’ Estates, ECF No. 276 (“Trustee’s
Objection”).
On March 3, 2026, Honeedew responded to the Trustee’s Objection. Cr. Honeedew’s Resp.
Opp’n to Ch. 7 Tr.’s Obj. to Claims 1-2 and 1-3, ECF No. 286 (“Honeedew’s Response”). On
March 6, 2026, the Trustee replied. Ch. 7 Tr.’s Reply Further Supp. Obj. to Claims Filed by
Honeedew, ECF No. 288 (the “Trustee’s Reply”).
The Court heard argument on the Trustee’s Objection, Honeedew’s Response, and the
Trustee’s Reply on March 10, 2026. The Court determined that Honeedew’s claims should be
reclassified from secured to unsecured claims and reserved decision respecting the allowed amount
of the claims. March 10, 2026 Hr’g Tr. at 67:9–25, ECF No. 319. At a hearing held on April 7,
2026, the Court informed the parties it would memorialize its determinations in a memoranda.
April 7, 2026 Hr’g Tr. at 37: 11–15, ECF No. 323.
BACKGROUND
Debtors’ Bankruptcy Cases and Election of the Chapter 7 Trustee
On July 11, 2024, Barbara filed a voluntary petition for relief under chapter 7 of title 11 of
the United States Code (the “Bankruptcy Code”). Volun. Pet. Individs. Filing Bankr., ECF No. 1.
David J. Doyaga was appointed the interim chapter 7 trustee for Barbara’s bankruptcy estate and
a first meeting of creditors was scheduled for August 8, 2024. Notice Ch. 7 Bankr. Case, Meet. of
Crs. & Notice Appoint. Interim Tr., ECF No. 3.
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On August 8, 2024, Honeedew filed a proof of claim, identified on the claims register of
Barbara’s bankruptcy case as Claim No. 1-1, asserting a $15,961,554.70 partially secured claim.
Barbara Abadi Claims Register, Claim No. 1-1. Honeedew asserted its claim was partially secured
by Barbara’s interest in an apartment located at Calee Parera 37:47, Buenos Aires Argentina (the
“Property”). Id.
On August 9, 2024, Carlos filed a voluntary petition for relief filed under chapter 7 of the
Bankruptcy Code, which is pending in this Court under Case No. 24-43315-jmm. Volun. Pet.
Individs. Filing Bankr., Carlos ECF No. 1.1 David J. Doyaga was appointed interim chapter 7
trustee for Carlos’ bankruptcy estate and a first meeting of creditors under Bankruptcy Code
Section 341 was scheduled for September 19, 2024. Notice Ch. 7 Bankr. Case, Meet. of Crs. &
Notice Appoint. of Interim Tr., Carlos ECF No. 4. Due to the commencement of Carlos’
bankruptcy case, the interim chapter 7 trustee adjourned the 341 meeting of creditors in Barbara’s
case. Notice Adj. Sec. 341 Meet. and Tr. Elect., ECF No. 41.
On August 21, 2024, Honeedew amended the proof of claim it filed in Barbara’s
bankruptcy case that reclassified its $15,961,554.70 claim from partially secured to unsecured.
See Barbara Abadi Claim Register, Claim No. 1-2. On September 18, 2024, Honeedew filed a
proof of claim, identified on the claims register for Carlos’ bankruptcy case as Claim No 1-1,
asserting a $15,961,554.70 unsecured claim. See Carlos Abadi Claim Register, Claim No. 1-1.
Honeedew’s proof of claim against Carlos is identical to Honeedew’s amended proof of claim
against Barbara.
Prior to the 341 meeting of creditors in each of the Debtor’s bankruptcy cases, Honeedew
notified the Office of the United States Trustee that it would seek elections for chapter 7 trustees
1 Citations to “Carlos ECF No. ___” are references to documents filed on docket of In re Carlos A. Abadi, Case No.
24-43315-jmm.
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pursuant to Bankruptcy Code section 702 and Bankruptcy Rule 2003(b)(3). See U.S. Tr.’s R.
Certify. Elect. Ch. 7 Tr., ECF No. 78. Honeedew elected Eric Huebscher as permanent chapter 7
trustee for Barbara’s bankruptcy estate at a 341 meeting of creditors held on September 16, 2024.
Id. Honeedew elected Mr. Huebscher as permanent chapter 7 trustee for Carlos’ bankruptcy estate
at a 341 meeting of creditors held on September 19, 2024. See U.S. Tr.’s R. Certify. Elect. Ch. 7
Tr., Carlos ECF No. 21. Honeedew was the sole voting creditor in both elections. See U.S. Tr.’s
R. Certify. Elect. Ch. 7 Tr., ECF No. 78; U.S. Tr.’s R. Certify. Elect. Ch. 7 Tr., Carlos ECF No. 21.
On October 11, 2024, the Office of the United States Trustee filed a Notice of Appointment of
Successor Trustee Eric Huebscher in each bankruptcy case. Notice Appoint. of Tr., ECF No. 88;
Notice Appoint. of Tr., Carlos ECF No. 29.
On November 1, 2024, the Court entered an order directing the Joint Administration of the
Debtors’ chapter 7 cases. Order Purs. Rule 1015(b) Fed. R. Bankr. P. Direct. Joint Admin. Ch. 7
Cases., ECF No. 98; Order Purs. Rule 1015(b) Fed. R. Bankr. P. Direct. Joint Admin. Ch. 7 Cases,
Carlos ECF No. 36. The deadline for filing claims in the jointly administered cases was August 8,
2025 (the “Bar Date”). Notice Discov. of Assets, ECF No. 209.
On December 24, 2025, Honeedew again amended the proofs of claim it filed in the
Debtors’ cases. Barbara Abadi Claims Register, Claim No. 1-3; Carlos Abadi Claims Register,
Claim No. 1-2 (together, the “Secured Proofs of Claim”). Each Secured Proof of Claim asserts a
claim in the amount of $15,961,554.70 that is secured by a lien on the Property. Id. Each Secured
Proof of Claim asserts the Property’s fair market value is $2,500,000. Id.
Honeedew’s claims are based on: (a) a $4,603,408.23 New York state court Judgment by
Confession by the Debtors in favor of Honeedew, entered May 9, 2017 (the “Initial Judgment”);
(b) a $23,016.61, 2023 New York state court money judgment for the Debtors’ civil contempt (the
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“First Contempt Judgment”); and (c) a Decision and Order entered on April 5, 2024 (the “Second
Contempt Judgment”) that also held the Debtors in contempt of a New York State court order.
Copies of the Initial Judgment and the First Contempt Judgement are attached to each Secured
Proof of Claim. Also attached is a chart that calculates interest on the Initial Judgment and
accounts for payments made to reduce the indebtedness. That chart represents that Barabara and
Carlos are jointly and severally liable to Honeedew for $7,524,492.09, as of July 11, 2024.
Honeedew did not attach the Second Contempt Judgment to its proofs of claim but filed a copy on
the Docket. See Aff. Supp. Opp’n and Supp. Misc. Relief, ECF. No. 17- 16. Honeedew asserts its
security interest in the Property derives from an Argentine exequatur proceeding. Id.
The Exequatur Proceeding
In August 2017, Honeedew commenced an exequatur proceeding in Argentina, seeking
recognition of the Initial Judgment. Honeedew’s Response at 11. The Argentine court issued an
order imposing a judicial attachment against the Property (the “Attachment Order”). Id. at Ex. A.
Honeedew claims the Attachment Order was recorded in the Real Property Registry of the City of
Buenos Aires. Id. at 11. In July 2022, Honeedew commenced a second exequatur proceeding (the
“Exequatur Proceeding”) in which the Argentine court re-ordered the registration of the
Attachment Order to preserve the legal effect and priority of the 2017 Attachment Order. Id.
Honeedew claims it paid a mandatory “justice tax” to pursue enforcement of the order against the
Property and the justice tax coupled with the Attachment Order create “a secured enforcement
interest” in the Property. Id.
On August 15, 2024, Honeedew filed an emergency motion in these cases for, among other
things, relief from the automatic stay to continue the Exequatur Proceedings. Mot. for Relief from
Stay, Carlos ECF No. 8 (“Honeedew’s MFRS”). Carlos objected to Honeedew’s MFRS but the
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Trustee did not. Debtor’s Opp’n to Honeedew’s Emergency Mot., Carlos ECF No. 19. The hearing
on Honeedew’s MFRS was adjourned from time to time. Although Honeedew informed the Court
it intended to withdraw the motion, Honeedew changed course and requested the Court to enter an
order denying Honeedew’s MFRS instead. March 6, 2025 H’rg Tr. 5:3–9, 20–23, ECF 191; Order
Den. Honeedew’s Emergency Mot. to (I) Joint. Admin. Related Bankr. Cases; (II) Modify Auto.
Stay; (III) Advance Sec. 341(a) Hear. Coinciding Pend. Case; and (IV) Related Relief, ECF No.
196.
The Trustee’s Sale of the Property
On December 10, 2024, the Trustee filed a motion to sell the Property free and clear of
liens and for Court approval of procedures to be used in connection with the sale, which the Court
approved on January 13, 2025. Ch. 7 Tr.’s Mot. for Entry of Orders, Pursuant 11 U.S.C. §§ 105(A),
363(B), (F), (K), (M), and 365, Rules 2002, 6004 and 6006 of Fed. R. Bankr. P., ECF No. 114;
Order, Pursuant 11 U.S.C. §§ 105(A), 363(B), (F), (K), (M), and 365, and Rules 2002, 6004 and
6006 of the Fed. R. Bankr. P., ECF No. 137. In April 2025, the Court granted the Trustee’s request
for extensions of deadlines fixed in the January 13, 2025 Order. Am. Order, Pursuant to 11 U.S.C.
§§ 105(A), 363(B), (F), (K), (M), and 365, and Rules 2002, 6004 and 6006 of the Fed. R. Bankr.
P., ECF No. 199 (the “Amended Sale Process Order”).
Pursuant to the Amended Sale Process Order, on February 27, 2026, the Trustee filed a
notice of the proposed sale of the Property identifying Emilio Noseda as the purchaser of the
Property for $900,000 and scheduling a March 10, 2026 hearing for the Court to consider the
Trustee’s request to approve the Property sale. Notice of Desig. Purchaser and Sale Confirm. Hr’g,
ECF No. 282 (the “Trustee’s Notice of Sale”).
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On March 3, 2026, Honeedew objected to the Trustee’s Motion and the Amended Sale
Process Order, claiming, among other things, that the Trustee was selling the Property for less than
market value and the Trustee could not sell the Property because Honeedew’s secured claims
exceeded the $900,000 sale price and, therefore, the Trustee could not satisfy Bankruptcy Code
section 363(f)’s requirements respecting sales free and clear of liens. Honeedew’s Consolid. Resp.
and Obj. to Ch. 7 Tr.’s: (I) Mot. to Conduct Sale of Prop. Free and Clear and Implement. Proceds.
[Doc. No. 199]; and (II) Mot. to Approv. Stip. and Compromise Pursuant to Fed. R. Bank. P. 9019
[Doc. No. 278], ECF No. 287. An evidentiary hearing on the Sale Motion was conducted on May
8, 2026 and May 11, 2026. The Court read a decision into the record overruling Honeedew’s
objections and approving the sale.
Trustee’s Claim Objection
The Trustee’s Objection seeks entry of an order, reclassifying Honeedew’s claims as
general unsecured claims and reducing the claims to $7,547,508.70. The Trustee argues the
Secured Proofs of Claim fail to establish that Honeedew has a valid security interest in the Property
under Argentine law. Trustee’s Objection at ¶ 56. Additionally, Honeedew’s claims against
Barbara cannot be secured claims because Barbara has no interest in the Property. Id. The Trustee
also claims Honeedew overstates the amount of its claims. Id. at ¶ 57. Specifically, the Trustee
argues that the Second Contempt Judgment did not grant Honeedew monetary damages that were
in addition to the Initial Judgment; rather, the Second Contempt Judgment directed the Debtors to
pay the Initial Judgment by a date certain or potentially face incarceration. Id.
Honeedew’s Response asserts its security interest in the Property is valid and enforceable
under Argentine law. Honeedew’s Response at ¶¶ 46-50. Additionally, Honeedew argues the
Trustee should be estopped from seeking to reclassify the Secured Proofs of Claim because the
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Trustee had notice of Honeedew’s security interest based on Honeedew’s original proof of claim
in Barbara’s case and the Honeedew MFRS, that put the Trustee on notice of the Exequatur
Proceeding. Honeedew’s Response at ¶ 66. Honeedew also argues it would be unfair to reclassify
Honeedew’s claims as unsecured claims because Honeedew pursued judgment enforcement for
years, and facilitated the Trustee’s election. Id. Further, Honeedew contends it is entitled to claims
in excess of $15 million based on the Initial Judgment, First Contempt Judgment, and Second
Contempt Judgment. Honeedew’s Response at ¶¶ 51-65. Honeedew also argues it is not precluded
from asserting secured claims, notwithstanding the Secured Proofs of Claim were filed after the
Bar Date, because the Secured Proofs of Claim are amendments to Honeedew’s timely filed proofs
of claim. Honeedew’s Response at ¶¶ 42-45
In its reply, the Trustee argues that Honeedew’s Secured Proofs of Claim should be
disallowed because they assert new claims that were filed after the Bar Date as opposed to
amendments to previously filed claims. Trustee’s Reply at ¶¶ 12-34. The Trustee also contends
that Honeedew is equitably estopped from asserting secured claims because the Trustee reasonably
relied on Honeedew’s representation that it was an unsecured creditor. Trustee’s Reply at ¶¶ 35-
43.
DISCUSSION
I. Honeedew Waived Its Security Interests and is Equitably Estopped from
Asserting Secured Claims
The Court need not determine whether Honeedew has a valid security interest in the
Property. If Honeedew had an enforceable security interest in the Property, Honeedew waived that
interest through its actions in the Debtors’ bankruptcy cases. Those actions include amending the
proof of claim it filed in Barbara’s case to omit its secured claim, filing an unsecured claim in
Carlos’ case, calling for and voting in a trustee election, and waiting approximately eighteen
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months to file the Secured Proofs of Claim. Further, as set forth more fully below, Honeedew is
equitably estopped from asserting a claim secured by the Property because the Trustee did not
know that Honeedew would assert secured claims, the Trustee reasonably relied on Honeedew’s
representations in its proofs of claims that its claims were unsecured, and the Trustee and the
Debtors’ bankruptcy estates would be prejudiced if Honeedew were permitted to assert claims
secured by the Property.
a. Honeedew Waived Any Security Interest It Had in the Property.
Bankruptcy Code section 702 governs the election of chapter 7 trustees and provides:
(a) A creditor may vote for a candidate for trustee only if such creditor--
(1) holds an allowable, undisputed, fixed, liquidated, unsecured claim of a
kind entitled to distribution under section 726(a)(2), 726(a)(3), 726(a)(4), 752(a),
766(h), or 766(i) of this title;
(2) does not have an interest materially adverse, other than an equity interest
that is not substantial in relation to such creditor's interest as a creditor, to the
interest of creditors entitled to such distribution; and
(3) is not an insider.
11 U.S.C.A. § 702 (West).
The chapter 7 trustee is the representative of general unsecured creditors and provides
protection for general unsecured creditors. In re Klein, 110 B.R. 862, 877 (Bankr. N.D. Ill.), aff’d
in part, rev’d in part, 119 B.R. 971 (N.D. Ill. 1990). The interests of secured creditors are adverse
to the interests of general unsecured creditors. Id.; In re Centennial Textiles, Inc., 209 B.R. 31, 35
(Bankr. S.D.N.Y. 1997) (undersecured claim represents materially adverse interest to unsecured
creditors). As Bankruptcy Code section 702(a)(2) precludes creditors with materially adverse
claims from voting in a trustee election, creditors holding secured claims are not permitted to vote
in trustee elections. Id.
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Waiver is “the intentional relinquishment of a known right” that may be “manifested either
expressly or by conduct inconsistent with an intent to enforce that right[.]” In re Concepts Am.,
Inc., 621 B.R. 848, 860 (Bankr. N.D. Ill. 2020). If a creditor “tak[es] actions inconsistent with
holding a secured claim[,]” the creditor may be deemed to have waived that security interest. Id.
“Although the mere filing of a secured debt as unsecured does not conclusively amount to a waiver
of security against a bankrupt's property, a valid waiver will be found to have been made if, in
addition for example, the secured claimant votes the claim for the full amount in the trustee
election.” Matter of Russo, 18 B.R. 257, 270 (Bankr. E.D.N.Y. 1982). A delay in asserting the
secured claim also may be grounds for waiver. In re Concepts Am., Inc., 621 B.R. at 861 (creditor
waived its security interest by voting in trustee election and failing to mention its secured status in
representations to the court and parties in interest for months).
Honeedew argues its Secured Proofs of Claim preserved Honeedew’s security interests in
the Property because the Secured Proofs of Claim, although filed after the Bar Date, are
amendments to its timely filed proofs of claim. Hondeedew’s Response at ¶¶ 42–50. Honeedew’s
failure to assert secured claims in timely filed proofs of claim, in and of itself, is not the reason the
Court is holding that Honeedew waived its secured claim. That a creditor asserts a secured claim
in a late filed claim is insufficient grounds to avoid a secured creditor’s lien. See Hamlett v.
Amsouth Bank (In re Hamlett), 322 F.3d 342, 348–49 (4th Cir. 2003); see also, Shelton v.
CitiMortgage, Inc. (In re Shelton), 477 B.R. 749 (B.A.P. 8th Cir. 2012); FDIC v. Union Entities
(In re Be-Mac Transp. Co., Inc., 83 F.3d 1020, 1027 (8th Cir. 1996); In re Thomas, 883 F.2d 991,
997 (11th Cir. 1989); In re Tarnow, 749 F.2d 464, 465 (7th Cir. 1984). Honeedew’s alleged
security interest in the Property would not have been waived even if Honeedew filed no proofs of
claim. See Bankruptcy Code section 506(d)(2) (“To the extent that a lien secures a claim against
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the debtor that is not an allowed secured claim, such lien is void, unless such claim is not an
allowed secured claim due only to the failure of any entity to file a proof of such claim. . . .”).
Rather, Honeedew waived any security interest it had in the Property because its actions were
inconsistent with those of a secured creditor.
Here, Honeedew filed a partially unsecured claim in Barbara’s case. However, prior to
calling a trustee election, Honeedew amended that proof of claim to omit the secured claim.
Thereafter, Honeedew filed an unsecured claim in Carlos’ case. As of the dates of the trustee
elections in the Debtors’ bankruptcy cases, Honeedew was the only creditor that had filed proofs
of claim. Therefore, Honeedew was the only creditor eligible to call for, and vote in, a trustee
election. See Bankruptcy Rule 2003(b)(3). If Honeedew had not disavowed its security interest
in the Property, no elections could have been called and the interim chapter 7 trustee would have
qualified as the permanent chapter 7 trustee in the Debtors’ Cases. See 11 U.S.C. § 701(b), 702(d).
Honeedew, however, would have been free to seek relief from the automatic stay to enforce its
liens on the Property, and monetize the Property for its sole benefit. Honeedew’s actions evidence
that it made a choice to waive its right to assert a security interest in the Property (assuming that
Honeedew had a security interest) for the privilege of electing the trustee of its choice, who would
incur the costs of monetizing the Property and the attendant risk of nonpayment if the Property
could not be sold.
The facts illustrate why holders of secured or partially secured claims are adverse to holders
of general unsecured claims and should not be permitted to vote in chapter 7 trustee elections or
delay asserting their security interests, without waiving their security interests. Here, Honeedew
elected the Trustee and acted as if it held unsecured claims while the Trustee and his professionals
worked to sell the Property to benefit the Debtors’ estates and all their creditors. Only after
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Honeedew disagreed with the Trustee’s decision to sell the Property to Noseda for $900,000 did
Honeedew seek to enforce its security interests in the Property and monetize the Property for
Honeedew’s sole benefit. Honeedew’s enforcement of its security interests would be detrimental
to all unsecured creditors. If Honeedew enforces its security interests in the Property, all proceeds
from the Property would be paid to Honeedew and no proceeds would be available to pay other
creditors of the estates, including the fees of estate professionals that assisted the Trustee with the
Property sale. Creditors with secured claims should be required to decide whether to monetize
their collateral at their own risk and expense, or to waive their security interests in their collateral
in the hopes a chapter 7 trustee will achieve a satisfactory result.
b. Honeedew is Equitably Estopped from Asserting a Claim Secured by the Property.
The Trustee asserts that Honeedew is equitably estopped from asserting a claim secured by
the property. Trustee’s Reply at ¶¶ 35–42. To succeed on its claim, the Trustee must prove he: (1)
lacked knowledge of Honeedew’s secured claim, (2) reasonably relied on Honeedew’s misleading
conduct, and (3) suffered prejudice as a result of his reliance. In re Cash, 319 F. App’x 4, 5 (2d
Cir. 2009).
Honeedew argues the Trustee knew of Honeedew’s secured claim based on Honeedew’s
MFRS that disclosed the status of the Exequatur Proceedings. However, after Honeedew filed that
motion, Honeedew: (a) amended its proof of claim in Barbara’s Case to delete the reference to a
partially secured claim; (b) filed an unsecured claim in Carlos’ Case; (c) called for trustee elections
in both cases; and (d) elected the Trustee in both cases. Further Honeedew represented in the
motion it was seeking stay relief to benefit the estates. Honeedew’s MFRS at 10. Honeedew also
represented in the motion that it was seeking relief from stay pending the election of a Trustee and
“there will be no interference with the bankruptcy cases as Honeedew will, if this Motion is
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granted, work cooperatively with the trustee towards securing the value derived from the
[Property].” Id. at 9, 11. Further, Honeedew’s counsel explained that Honeedew requested stay
relief because Honeedew was unable to communicate with the Argentine Court to end the
Exequatur Proceeding and did not want to “somehow violate a stay . . . with regards to anything
in Argentina.” March 6, 2025 H’rg Tr. 5:3–9, 20–23, ECF No. 191. Based on the foregoing, the
Honeedew MFRS did not put the Trustee on notice that Honeedew would assert claims secured by
the Property.
The Trustee reasonably relied on Honeedew’s representation in its proofs of claim that
Honeedew was an unsecured creditor. There is no indication in the record of these cases that
Honeedew was going to assert a secured claim until Honeedew filed the Secured Proofs of Claim,
which was approximately eighteen months after it filed unsecured claims, and almost a year after
the Trustee filed the Sale Motion.
The Debtors’ bankruptcy estates will suffer prejudice from Honeedew’s change of position.
Once Honeedew filed unsecured proofs of claim admitting it did not have a lien on the Property,
the Trustee had a reasonable expectation that Property sale proceeds would be available to pay the
costs of sale (including legal fees and the Trustee’s commission), and to fund a distribution to
general unsecured creditors. Honeedew’s shift from unsecured creditor to secured creditor
occurred after the Trustee incurred the expense of marketing the Property, and after marketing
efforts indicated the Property would not fetch more than $900,000 – a fraction of Honeedew’s
alleged $15 million claim. Therefore, if Honeedew were permitted to assert a security interest in
the Property now, all sale proceeds would be paid to Honeedew on account of its secured claims
and there would be no proceeds to pay the fees and expenses incurred by the Trustee or his
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professionals in marketing the Property and procuring a buyer, or to fund a distribution to other
unsecured creditors.
The Trustee has satisfied his burden of proving he did not know of Honeedew’s secured
claims, reasonably relied on Honeedew’s representation that its claims were unsecured, and
permitting Honeedew to assert a claim secured by the Property would prejudice the Debtors’
bankruptcy estates. Therefore, Honeedew is equitably estopped from asserting a security interest
in the Property.
II. Honeedew’s Claim Amount
Under the Bankruptcy Rules, a properly filed proof of claim is prima facie evidence of the
validity and amount of the claim. See Fed. R. Bankr. P. 3001(f) (“[a] proof of claim executed and
filed in accordance with [the Bankruptcy Rules] shall constitute prima facie evidence of the
validity of the amount of the claim.”). A proof of claim is properly filed if it “set[s] forth the facts
necessary to support the claim.” In re GEK Realty & Home Improvement LLC, 609 B.R. 61, 68
(Bankr. E.D.N.Y. 2019). A party objecting to a claim carries the burden of presenting evidence
sufficient to rebut this presumption of validity. Id. (citing Raleigh v. Illinois Dep’t of Revenue, 530,
U.S. 15, 15 (2000)). To be “sufficient,” the objecting party’s evidence must have probative value
that is “equal” in force to the facts set forth in the claim. Id.
The Trustee argues the Second Contempt Judgment does not grant a fine that is separate
and apart from the amounts owed under the Initial Judgment; rather, the Second Contempt
Judgment directs the Debtors to pay the amounts owed under the Initial Judgement within thirty
days of the entry of the Second Contempt Judgment or risk incarceration.
The Second Contempt Judgment recounts that the Debtors owed $4,603,408.23 to
Honeedew due to the Initial Judgment and the Debtors interfered with Honeedew’s attempts to
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collect the debt. In that regard, the Second Contempt Judgment found that the Debtors falsely
represented to Honeedew that the Property was encumbered, and to the Argentine Court that the
Initial Judgment was fraudulent. In response, the New York state court entered an order that
directed the Debtors to execute affidavits acknowledging the validity of the Initial Judgment. The
Debtors failed to provide the affidavits and took other actions that unfairly impaired Honeedew’s
ability to collect the Initial Judgement. The Second Contempt Judgment states it is:
OREDERED that the defendants Carlos Abadi and Barbara Abadi are directed to
pay the plaintiff, within 30 days of the date of the service upon them of this order
with notice of entry, the sum of $4,603,408.23, plus statutory interest from May 17,
2017, the date that the judgment by confession was entered; and it is further
ORDERED that, unless the defendants shall purge themselves of the aforesaid
contempt by paying the judgment in the sum of $4,603,408.23, plus statutory
interest from May 17, 2017, upon the failure of one or both of the defendants Carlos
Abadi and Barbara Abadi to voluntarily appear before the Supreme Court to answer
this order of contempt, the court will issue a warrant directing the sheriff to bring
the non-appearing defendant(s) before the court.
Id. The Debtors failed to pay $4,603,408.23 within 30 days of entry of the Second Contempt
Judgment. Ultimately, the New York state court judge incarcerated the Debtors for contempt for
failing to pay the Initial Judgment as directed. The Debtors were released from prison only after
filing these bankruptcy cases.
Honeedew’s calculation of the Second Contempt Judgment as $8,414,046.00 is based on a
page of a New York state court hearing transcript, in which the judge explained to Carlos that the
amount owed under the Initial Judgment had grown from $4.6 million to over $8 million due to
the accrual of interest at the nine percent statutory rate of interest. See May 15, 2024 H’rg Tr. at
34, Honeedew’s Response, Ex. C, ECF No. 286-6. The transcript does not support Honeedew’s
contention that the Second Contempt Judgment is owed in addition to the amounts owed under the
Initial Judgment.
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The Court finds that the Second Contempt Judgment is clear and unambiguous on its face
and directed the Debtors to pay the amounts owed under the Initial Judgment, plus interest, by a
date certain, or face imprisonment. The Court finds the Second Contempt Judgment did not
impose an additional $8,144,000.00 fine on the Debtors. Therefore, as of the dates the Debtors’
bankruptcy cases were commenced, each of the Debtors, jointly and severally, owed Honeedew
$7,547,508.70, representing the sum of $7,524,492.09 of principal and interest owed under the
Initial Judgment plus $23,016.61 under the First Contempt Judgment.
CONCLUSION
For the reasons set forth above, it is
ORDERED, that the proof of claim filed on behalf of Honeedew and identified on the
claims register of Barbara’s bankruptcy case as Claim No. 1-3 is reclassified, reduced, and allowed
as a general unsecured claim in the amount of $7,547,508.70; and it is further
ORDERED, that the proof of claim filed on behalf of Honeedew and identified on the
claims register of Carlos’ bankruptcy case as Claim No. 1-2 is reclassified, reduced, and allowed
as a general unsecured claim in the amount of $7,547,508.70.
____________________________
Jil Mazer-Marino
Chief United States Bankruptcy Judge
Dated: May 21, 2026
Brooklyn, New York
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