## Facts

- Stephan Jay Lawrence created an offshore asset-protection trust in Mauritius in 1991, initially valued at about $7 million, while retaining the power to appoint and remove trustees.
- Soon after the trust was created, Lawrence suffered a $20.4 million arbitration award in a securities-related dispute, which was later confirmed and collected upon.
- The trust was amended over time to add creditor-protection features, including a spendthrift clause, a duress provision limiting the settlor’s ability to act under compulsion, and provisions purporting to terminate Lawrence’s interest upon bankruptcy and to designate him as an “excluded person.”
- Lawrence filed a voluntary Chapter 7 petition in 1997.
- In discharge-related litigation, the bankruptcy court entered a default judgment (as a discovery sanction) establishing the trustee’s factual allegations; it determined Florida law governed the trust and that the trust was property of the bankruptcy estate.
- In 1999, the bankruptcy court issued a turnover order requiring Lawrence to deliver the trust assets to the Chapter 7 trustee.
- After Lawrence failed to comply, the bankruptcy court found that he retained effective control through powers to remove and appoint trustees and to alter beneficiary status, rejected his asserted inability to comply, held him in civil contempt, and ordered incarceration until compliance.
- The district court affirmed the contempt and incarceration order; Lawrence appealed.

## Issues

1. Whether a debtor may avoid civil contempt for failure to comply with a turnover order by proving “impossibility” of compliance based on trust amendments and foreign trustees’ noncooperation.
2. Whether coercive incarceration for civil contempt may continue when the contemnor claims he lacks the ability to purge the contempt.

## Decision

- The Eleventh Circuit affirmed the district court’s order upholding the bankruptcy court’s civil contempt finding and coercive incarceration.
- The court held Lawrence did not carry his burden to show compliance was impossible.
- The court agreed that Lawrence retained sufficient control over the trust—particularly via trustee appointment and removal powers—to cause access to the trust assets.
- The court treated Lawrence’s claimed inability as self-created, given the trust’s structure and amendments designed to obstruct creditors and court process.
- The court upheld continued civil contempt incarceration because Lawrence was found to have the practical ability to purge the contempt by complying with the turnover order.

## Legal Principles

- A civil contemnor asserting impossibility bears the burden to establish “clearly, plainly, and unmistakably” that compliance is impossible.
- Impossibility is not a defense to contempt when the contemnor is responsible for creating the inability to comply, including by voluntarily placing assets beyond reach through engineered arrangements.
- Civil contempt incarceration is permissible when it remains coercive rather than punitive, meaning the contemnor retains the ability to purge the contempt through compliance.
- Bankruptcy courts may compel turnover of estate property and use civil contempt sanctions to enforce compliance with turnover orders where the debtor retains effective control over the property.

## Conclusion

The Eleventh Circuit affirmed coercive civil contempt incarceration enforcing a bankruptcy turnover order, holding that the debtor failed to prove true impossibility and could not rely on an inability he engineered through an offshore trust structure and retained control rights.


In re Lawrence, 279 F.3d 1294 (11th Cir. 2002)