Jason Wayne Fowler and Sondra Stedron Fowler

UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF WISCONSIN
In re: 	Case No. 25-23180-kmp
Jason Wayne Fowler and
Sondra Stedron Fowler, 	Chapter 11
Debtors.
DECISION AND ORDER GRANTING DEBTORS’ MOTION TO RESCIND
APPOINTMENT OF CHAPTER 11 TRUSTEE
Jason Fowler and Sondra Stedron Fowler (the “Debtors”) ask the Court to terminate the
appointment of the Chapter 11 trustee and return them to possession and management of their
bankruptcy estate. For the reasons explained below, the Court concludes that the circumstances
that existed when the Debtors consented to the appointment of a trustee have materially changed.
The Debtors now have competent bankruptcy counsel, understand their obligations as debtors-in-
possession, and have demonstrated a willingness to comply with the Bankruptcy Code, the
Bankruptcy Rules, and the requirements of the United States Trustee. Under the highly unusual
circumstances of this case, § 1105 of the Bankruptcy Code permits the termination of the
trustee’s appointment and the restoration of the Debtors as debtors-in-possession.
Background
In late 2023, TransPecos Banks, SSB (“TransPecos”) obtained a judgment exceeding $3
million in Texas state court against the Debtors and several affiliated entities. After obtaining
the judgment, TransPecos filed a complaint in the United States District Court for the Eastern
District of Wisconsin alleging that the Debtors’ transfer of real property located in Fontana,
Wisconsin, on Lake Geneva, to trusts benefiting their daughters was voidable under Wisconsin’s
Uniform Voidable Transactions Law (the “Lake Geneva Fraudulent Transfer Litigation”).
TransPecos also pursued post-judgment remedies against the Debtors and the entities in Texas,
including repossession and liquidation of steel collateral.
Katherine Maloney Perhach
Chief United States Bankruptcy Judge
So Ordered.
Dated: September 29, 2026
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In November 2024, the Debtors sought assistance from Attorney E. Aaron Cartwright III
in defending the Texas proceedings and prosecuting separate claims against TransPecos. On
February 5, 2025, the Debtors and affiliated entities, through Mr. Cartwright, filed a Petition for
Bill of Review in Texas state court seeking to set aside the TransPecos judgment and to obtain a
new adjudication on the merits (the “Bill of Review”). 1 Docket No. 233, ¶ 19, Ex. C; Docket
No. 252, ¶ 21, Ex. D. On February 18, 2025, the Debtors and the entities, also through Mr.
Cartwright, filed another action in Texas state court asserting that TransPecos had acted
unreasonably in liquidating collateral under Article 9 of the Uniform Commercial Code (the
“UCC Article 9 Action”). See Docket No. 252, ¶ 14, Ex. A.
By the time the Debtors filed bankruptcy in May 2025, they were defending litigation in
several jurisdictions: (1) TransPecos was pursuing collection proceedings in Texas, including
the appointment of a receiver; (2) TransPecos was litigating the Lake Geneva Fraudulent
Transfer Litigation; (3) Creditor AS Forge was pursuing post-judgment relief in Illinois related
to a judgment entered in the Northern District of Illinois in excess of $500,000; and (4) Shinsho
American Corporation was also pursuing claims against the Debtors related to a judgment and
fee order entered in the Southern District of Texas in excess of $13 million. The Debtors and
Mr. Cartwright were unable to keep up with the discovery and other deadlines. Mr. Cartwright
testified that the volume of litigation placed the parties at risk of contempt in multiple courts.
Mr. Cartwright concluded that the Debtors had to file bankruptcy immediately to obtain the
protection of the automatic stay.
The Debtors filed a Chapter 13 bankruptcy petition on May 30, 2025. They did so pro se,
but on Mr. Cartwright’s advice. Mr. Cartwright had no bankruptcy experience. He had never
filed a bankruptcy case, had taken no bankruptcy continuing legal education, and had taken only
one “theoretical” bankruptcy course in law school that did not address the “practical nature of
determining which chapter to file and then making those filings and completing those
schedules.” He testified that he could not give the Debtors assurance concerning the bankruptcy
process beyond assisting with the initial filing and schedules. He did not, however, sign or file
the Debtors’ bankruptcy petition or schedules.
On July 2, 2025, the Debtors filed a motion to convert their case to Chapter 11 because
they exceeded the Chapter 13 debt limit and were ineligible for Chapter 13. Docket No. 38.
Although Mr. Cartwright assisted the Debtors with the motion to convert, the filing did not
identify him as having made a major substantive contribution, contrary to the Court’s
1 A bill of review is a unique Texas state court procedure. It permits an independent equitable proceeding to set
aside a judgment that is no longer appealable or subject to challenge by a motion for new trial. See Baker v.
Goldsmith, 582 S.W.2d 404, 406 (Tex. 1979); Tex. R. Civ. P. 329b(f). To set aside a judgment by bill of review, the
petitioner must ordinarily allege and prove “(1) a meritorious defense to the cause of action alleged to support the
judgment, (2) which he was prevented from making by the fraud, accident or wrongful act of the opposite party, (3)
unmixed with any fault or negligence of his own.” Baker, 582 S.W.2d at 406-07.
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ghostwriting rule.2 Mr. Cartwright formally appeared in the case on July 22, 2025. Docket No.
64. No one objected to conversion of the case to Chapter 11. The Court converted the case to
Chapter 11 on July 31, 2025.
Shortly thereafter, TransPecos moved for appointment of a Chapter 11 trustee. The
Debtors, through Mr. Cartwright, initially objected. Their objection argued that the appointment
of a trustee is an extraordinary remedy that requires proof by clear and convincing evidence and
that the Court should closely examine the facts offered in support of such relief. Docket No.
102. The objection also emphasized the additional administrative expense and delay that a
trustee would cause.
The Court held a preliminary hearing on TransPecos’ motion for appointment of a trustee
on August 27, 2025, and scheduled an evidentiary hearing for October 9, 2025. At the August
hearing, and more than a month after Mr. Cartwright had formally appeared in this case, the
Court asked Mr. Cartwright whether he intended to seek employment as counsel for the Debtors
under § 327 of the Bankruptcy Code. Mr. Cartwright finally filed such an application on August
29, 2025. The United States Trustee and TransPecos objected. Following a hearing on
September 23, 2025, the Court denied Mr. Cartwright’s employment application for several
reasons, including the fact that Mr. Cartwright represented, or purported to represent, interests
adverse to the Debtors’ estate, including Continuous Cast Alloys, LLC, a creditor of the Debtors,
and the Debtors’ daughters, who were beneficiaries of the trust that received the alleged voidable
transfer of the Lake Geneva house from the Debtors.
Two days after the Court denied Mr. Cartwright’s employment application, the Debtors
sought a continuance of the evidentiary hearing to consider TransPecos’ motion for appointment
of a trustee scheduled for October 9, 2025, because they were without counsel and needed time
to obtain bankruptcy counsel. The motion was apparently drafted by Mr. Cartwright, though
again, his assistance was not disclosed. Docket No. 146. The Court granted the continuance and
rescheduled the evidentiary hearing for November 20, 2025.
On November 5, 2025, Mr. Cartwright filed a document captioned “Notice of Agreement
to Appointment of Substitute Chapter 11 Trustee.” Docket No. 170. The document, signed by
the Debtors, stated that they had no objection to and affirmatively agreed with TransPecos’
request for appointment of a Chapter 11 trustee. The evidence established that the Debtors
believed appointment of a trustee was effectively required because Mr. Cartwright could not
represent the estate and they had not obtained bankruptcy counsel. They also believed, based on
2 See Local Rule 9010.1, “Ghostwriting Prohibited: All attorneys, whether or not the attorney of record, who make a
major substantive contribution to a petition, pleading, proposed order, trial‐related document, motion, memorandum,
or brief that is filed with the court or is intended to be filed with the court, must be identified in the filing. No
attorney may draft a document intended to be filed by an otherwise unrepresented person without complying with
this Local Rule.” See Superseded Local Rules Effective November 1, 2017, through December 31, 2025, available
at https://www.wieb.uscourts.gov/local-rules.
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Mr. Cartwright’s advice, that the trustee would continue prosecuting their Bill of Review and
their UCC Article 9 Action in Texas.
Ms. Fowler testified that the Debtors did not understand that they had a choice whether to
consent to the appointment of a trustee. Mr. Cartwright testified that he believed a trustee was
the only practical means of resolving the conflicts created by his representation of other parties
and that his lack of bankruptcy experience made appointment of a trustee likely. He advised the
Debtors that the trustee would review their Bill of Review and UCC Article 9 Action, decide the
order in which to pursue them, oversee their debtor-in-possession account, examine significant
transfers, and leave them with some control over their assets. He did not explain to the Debtors
how the appointment of a trustee would affect their rights and authority as debtors-in-possession.
Mr. Fowler likewise testified that he understood the trustee would provide oversight and
would pursue the Debtors’ claims, including the Bill of Review and the UCC Article 9 Action,
and would “fight for our behalf” in the Lake Geneva Fraudulent Transfer Litigation. He did not
understand that the trustee could instead decide not to pursue the Bill of Review or the UCC
Article 9 Action or could assume broad control over the Debtors’ finances and operations.
Taken together, the testimony established that the Debtors did not understand the legal
consequences of consenting to the appointment of a Chapter 11 trustee.
Because the Debtors withdrew their objection to the appointment of a trustee, the Court
did not conduct the scheduled evidentiary hearing on the merits of TransPecos’ request and did
not make findings of fact establishing “cause” for the appointment of a trustee under § 1104.
Instead, based solely on the Debtors’ consent, the Court entered an order granting TransPecos’
motion to appoint a trustee. The United States Trustee appointed Virginia E. George as the
Trustee and the Court entered an order approving the appointment of Ms. George as the Trustee
on November 18, 2025.
After her appointment, the Trustee sought an order prohibiting the Debtors from using,
spending, transferring, or disposing of post-petition earnings without Court approval and
requiring them to deliver those earnings to the Trustee. Docket No. 193. The Debtors did not
object, and the Court entered that order on December 17, 2025. Docket No. 206. That order
prompted the Debtors to engage competent bankruptcy counsel. See Docket No. 242 at 8 n.2;
Docket No. 346 ¶ 1. Thereafter, the Debtors’ counsel negotiated with the Trustee over a living-
expense budget. See Docket No. 242 at 8 n.2. These negotiations resulted in further litigation
concerning the Debtors’ continued use of credit cards and ultimately in an agreed monthly
budget. See Docket No. 231 ¶¶ 6-9; Docket No. 301. Over the Debtors’ objection, the Court
later required the Debtors to deposit their post-petition earnings into the Trustee’s account, from
which the agreed monthly budget would be returned by the Trustee to the Debtors. Docket No.
339.
The Trustee also sought to consolidate litigation involving claims of the bankruptcy
estate. On February 18, 2026, the United States District Court for the Eastern District of
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Wisconsin entered an order substituting the Trustee for TransPecos as the plaintiff in the Lake
Geneva Fraudulent Transfer Litigation and referring the case to this Court. Docket No. 228.
That litigation is currently pending as George v. Fowler et al., Adversary Case No. 26-2020. In
the Debtors’ bankruptcy case, the Trustee filed a motion to compromise seeking to reduce,
reclassify, and allow TransPecos’ proof of claim as an unsecured claim in the amount of
$4,452,013.32 and to dismiss the Debtors’ Bill of Review in Texas state court. Docket No. 233.
The Debtors, frustrated by the Trustee’s control over their post-petition earnings and by
her proposal to dispose of the litigation they had commenced before filing bankruptcy, moved to
rescind the Trustee’s appointment under § 1105 of the Bankruptcy Code. They also objected to
the Trustee’s proposed compromise and to TransPecos’ claim. Docket Nos. 251, 253.
The Debtors initially requested that the Court vacate the Order Approving Appointment
of Chapter 11 Trustee pursuant to Fed. R. Civ. P. 60(b)(1) and (5), applicable here through Fed.
R. Bankr. P. 9024. Docket No. 242. They later abandoned Rule 60(b) as an independent basis
for relief. The Court therefore considers only whether the Trustee’s appointment should be
terminated and the Debtors restored as debtors-in-possession under § 1105. The Trustee,
TransPecos, and the United States Trustee all oppose the Debtors’ Motion to Rescind the
Appointment of the Chapter 11 Trustee.
Analysis
Section 1105 of the Bankruptcy Code provides:
At any time before confirmation of a plan, on request of a party in
interest or the United States trustee, and after notice and a hearing,
the court may terminate the trustee’s appointment and restore the
debtor to possession and management of the property of the estate
and of the operation of the debtor’s business.
The statute gives the bankruptcy court discretion to terminate a trustee’s appointment.
The text of § 1105 does not prescribe any fixed test for exercising that discretion. As
summarized in Collier on Bankruptcy, relevant considerations include: (1) new evidence that
potentially undercuts the rationale for appointing the trustee; (2) changed conditions making a
trustee no longer in the best interests of the estate; and (3) new circumstances eliminating the
reason for the trustee’s appointment in the first place. Collier on Bankruptcy ¶ 1105.02 (Richard
Levin & Henry J. Sommer eds., 16th ed.) (citing In re Amerejuve, Inc., No. 14-35482, 2015 WL
2226344, at *12, 2015 Bankr. LEXIS 1496, at *37 (Bankr. S.D. Tex. Apr. 29, 2015)). Other
grounds may also support termination. Id.
The cases applying § 1105 often ask whether the debtor is more likely to manage the
bankruptcy estate properly now than when the court ordered the appointment of a trustee. See In
re Van Upp, No. 09-31932 TEC, 2010 WL 2901634, at *2 (Bankr. N.D. Cal. July 19, 2010);
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Macco Props., Inc. v. Deeba (In re Macco Props.), Case No. 10-16682-NLJ, Adv. No. 11-1099,
2011 Bankr. LEXIS 5755, at *59-60 (Bankr. W.D. Okla. Sept. 7, 2011). Where the
circumstances that led to appointment of a trustee remain unchanged, termination is
inappropriate. 	See In re Taub, 441 B.R. 211 (Bankr. E.D.N.Y. 2010); In re Curlew Valley
Assocs., 14 B.R. 506, 515 (Bankr. D. Utah 1981). Conversely, where a change in circumstances
eliminates the original need for a trustee, termination may be appropriate. See In re Eastern
Consol. Utils., Inc., 3 B.R. 591, 593 (Bankr. E.D. Pa. 1980); In re South Montana Elec.
Generation & Transmission Co-op., Inc., No. 11-62031-11, 2013 WL 6198217, at *9 (Bankr. D.
Mont. Nov. 26, 2013).
This case presents the kind of changed circumstances contemplated by § 1105. This is
not a case where the Court adjudicated allegations underlying a request for appointment of a
trustee and made findings of fact establishing a basis to appoint a trustee under § 1104. Instead,
the Trustee was appointed after the Debtors withdrew their objection to appointment of a trustee.
When the Debtors consented to appointment of a trustee, they lacked competent bankruptcy
counsel, were poorly positioned to proceed as pro se Chapter 11 debtors in a complex case, and
relied on advice from an attorney who lacked bankruptcy experience and who could not serve as
their debtor-in-possession counsel because of conflicts.
The circumstances are materially different now. The Debtors have retained experienced
bankruptcy counsel who is familiar with complex cases like theirs. They have worked with
counsel to amend their schedules and Statement of Financial Affairs, have addressed issues
raised by the Trustee, and have demonstrated an understanding of the obligations imposed on
debtors-in-possession. Both Debtors testified that they intend to follow the advice of counsel
and comply with the Bankruptcy Code, the Bankruptcy Rules, and the requirements of the
United States Trustee.
The circumstances of this case are closely analogous to those in In re Eastern
Consolidated Utilities. There, the major cause of the debtor’s difficulties leading to the
appointment of a trustee was “the result of ill-advised legal counsel.” Eastern Consol. Utils., 3
B.R. at 593. After the debtor retained competent, experienced bankruptcy counsel, the court
concluded that the new counsel, together with the principals’ stated intention to comply with the
Bankruptcy Code, made continued service of a trustee unnecessary. Id. The same reasoning
applies here.
The Trustee and the United States Trustee identify several concerns that, in their view,
demonstrate that the Debtors should not be returned to possession, including incomplete
disclosures, post-petition debt incurred without Court authorization, disregard of corporate
formalities, failure to file personal income tax returns since 2021, an insufficient appreciation of
their responsibilities, and a willingness to place personal interests ahead of the estate. These
concerns warrant consideration. They do not, however, overcome the changed circumstances
established at the hearing.
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First, the Debtors have worked with their new bankruptcy counsel to correct and
supplement their schedules and financial disclosures. Ms. Fowler testified that she devoted
substantial time to reviewing and amending the schedules with counsel. After the Trustee
identified additional issues at the evidentiary hearing, the Debtors promptly worked with counsel
to further amend their Statement of Financial Affairs. See Docket No. 356. The Trustee herself
recognizes that some of the omissions were “immaterial” or “explainable.” See Docket No. 364
¶ 97.
Second, although the Debtors incurred post-petition debt, the evidence established that
they did so before obtaining competent bankruptcy counsel. Both Debtors testified that they now
understand that post-petition debt generally may not be incurred without Court authorization,
except as permitted in the ordinary course of business. Their testimony reflects an understanding
that was absent when they consented to the appointment of the Trustee.
Third, the Debtors acknowledge their outstanding personal tax returns and intend to file
them as soon as possible. Their failure to file returns remains a matter requiring serious and
prompt attention. It is not, however, a circumstance that necessarily requires continued
appointment of a trustee where the Debtors are now represented by competent counsel and
understand that their tax obligations must be timely addressed. Failure to timely file required tax
returns or pay required post-petition taxes may constitute cause for conversion or dismissal under
11 U.S.C. § 1112(b)(4)(I), and the Debtors remain subject to that potential statutory
consequence.
Finally, the Trustee’s remaining concerns largely arise from the Debtor’s testimony
concerning their understanding of their obligations and the estate’s interests. Viewed in the
context of the entire record, those concerns do not establish that the Debtors remain incapable of
properly managing the estate as they were when they consented to appointment of the Trustee.
The evidence instead demonstrates a materially greater understanding of their fiduciary
obligations and of the limits on their authority. Most importantly, they now have competent
bankruptcy counsel and have testified under oath that they will follow counsel’s advice and
comply with the Bankruptcy Code, the Bankruptcy Rules, and the requirements of the United
States Trustee.
The Court therefore concludes that the Debtors have established that they are
substantially more likely to manage the estate properly now than when the Trustee was
appointed. Their retention of competent bankruptcy counsel, their demonstrated efforts to
correct prior disclosures, their understanding of their obligations, and their commitment to
comply with the Bankruptcy Code, the Bankruptcy Rules, and requirements of the United States
Trustee constitute new circumstances that eliminate the need for the Trustee’s continued
appointment.
The Court emphasizes that its conclusion to terminate the Trustee’s appointment is not a
criticism of the Trustee or her performance. To the contrary, the Trustee has performed her
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duties diligently and effectively and she and her counsel have provided important, reasonable,
and necessary services to the estate. Her testimony at the evidentiary hearing and her
performance throughout her tenure as Trustee demonstrated a thorough and careful
administration of the estate. The termination of her appointment results from changed
circumstances, not from any deficiency in the Trustee’s performance or in the services she has
provided the estate.
Restoration of the Debtors to possession does not eliminate the statutory and fiduciary
constraints applicable to debtors-in-possession. The Debtors remain subject to the reporting
requirements, fiduciary duties, and other obligations imposed by the Bankruptcy Code, the
Bankruptcy Rules, the requirements of the United States Trustee, and the orders of this Court.
The Court may impose appropriate limitations and conditions to ensure that this case proceeds
expeditiously. See 11 U.S.C. § 105(d)(2). Creditors and other parties in interest also retain their
statutory rights, including the right to seek conversion or dismissal of this case for cause under
§ 1112(b).
The Court recognizes that restoration of the Debtors to possession will potentially return
to them control over the estate’s causes of action, including the Lake Geneva Fraudulent
Transfer Litigation. That litigation concerns the Debtors’ transfer of the Lake Geneva property
to trusts established for the benefit of their daughters. The claims asserted in that litigation
therefore implicate both an asset of the bankruptcy estate and transactions involving persons
closely related to the Debtors. As debtors-in-possession, the Debtors have a fiduciary duty to
preserve and, where appropriate, prosecute claims belonging to the estate. The Debtors may not
use their restored control of the estate to dispose of those claims for the benefit of themselves,
their daughters, or any other person inconsistent with their fiduciary duties or at the expense of
the estate. Accordingly, the Debtors may not compromise, dismiss, settle, release, waive,
transfer, abandon, or otherwise dispose of the Lake Geneva Fraudulent Transfer Litigation
without further order of this Court following notice and an opportunity for a hearing.
The Debtors shall also take reasonable steps to preserve the Lake Geneva Fraudulent
Transfer Litigation claims, including preserving relevant evidence, documents, and records, and
must comply with applicable deadlines and orders, including those necessary to prevent any
claim in the litigation from becoming time barred, waived, or otherwise unenforceable. The
Debtors likewise shall not take, or fail to take, any action for the purpose of impairing,
prejudicing, extinguishing, or rendering unenforceable the claims asserted in the Lake Geneva
Fraudulent Transfer Litigation.
If the Debtors fail to prosecute the Lake Geneva Fraudulent Transfer Litigation in
accordance with their statutory or fiduciary duties, TransPecos or another party in interest may
seek derivative standing to prosecute those claims on behalf of the estate. See In re Xonics
Photochemical, Inc., 841 F.2d 198, 203 (7th Cir. 1988). In light of the history of the Lake
Geneva Fraudulent Transfer Litigation, the circumstances giving rise to the Trustee’s prosecution
of those claims, and the fact that the litigation concerns transfers to trusts benefiting the Debtors’
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daughters, the Court would give serious consideration to such a request if the evidence
establishes that the Debtors have failed to fulfill their statutory or fiduciary obligations with
respect to the litigation. However, nothing in this decision determines the merits of the Lake
Geneva Fraudulent Transfer Litigation, the parties’ respective defenses or claims, or the identity
of the party that should prosecute that litigation following termination of the Trustee’s
appointment.
IT IS THEREFORE ORDERED: the Trustee’s appointment is terminated.
IT IS FURTHER ORDERED: the Debtors are returned to possession and management
of the property of the estate.
IT IS FURTHER ORDERED: the Debtors shall not compromise, dismiss, settle, release,
waive, transfer, abandon, or otherwise dispose of the claims asserted in the Lake Geneva
Fraudulent Transfer Litigation without further order of this Court.
IT IS FURTHER ORDERED: the Debtors shall take reasonable steps to preserve the
claims asserted in the Lake Geneva Fraudulent Transfer Litigation, including preserving relevant
evidence, documents, and records, and must comply with applicable deadlines and orders,
including those necessary to prevent any claim in the Lake Geneva litigation from becoming
time barred, waived, or otherwise unenforceable, unless otherwise ordered by this Court.
IT IS FURTHER ORDERED: the Debtors shall not take, or fail to take, any action for
the purpose of impairing, prejudicing, extinguishing, or rendering unenforceable the claims
asserted in the Lake Geneva Fraudulent Transfer Litigation, unless otherwise ordered by this
Court.
IT IS FURTHER ORDERED: Swanson Sweet LLP shall file a final application for
compensation as the attorneys for the Trustee on or before October 30, 2026.
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