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October 15, 2010

Lehman Bankruptcy a $1 Billion Payday for Advisers

Read the article here.

October 15, 2010 in Current Affairs | Permalink | Comments (0) | TrackBack

October 14, 2010

Former Edmonton Oilers Owner Peter Pocklington to be Sentenced in California Perjury Case

Pocklington pleaded guilty to a single perjury count in May for making false statements and oaths in his bankruptcy case.

Read the article here.

October 14, 2010 in Current Affairs | Permalink | Comments (0) | TrackBack

Public Counsel looking for Volunteers for Reaffs

From Public Counsel:

Dear Volunteers:

I am writing to invite you to participate in one of Public Counsel’s Los Angeles Reaffirmation Clinics in the month of October. At our clinic, you will have the opportunity to provide brief counseling to
pro se debtors prior to their reaffirmation hearings.

As many of you know, the Los Angeles Division of the Bankruptcy Court has experienced a significant increase in the filing of chapter 7 cases, many of which involve reaffirmation hearings. To facilitate the timely hearing of reaffirmation motions, the Court has scheduled 2-3 pro se reaffirmation calendars for each remaining month of 2010. Public Counsel is coordinating with the Court to provide volunteer attorneys at each of these additional pro se reaffirmation calendars. We would greatly appreciate it if you could join us to volunteer at one or more of the upcoming October reaffirmation dates:

• October 20, 2010: counseling begins at 8:30 AM, room 1568, Judge Robles
• October 20, 2010: counseling begins at 10:30 AM, room 1568, Judge Robles
• October 20, 2010: counseling begins at 12:30 PM, room 1345, Judge Donovan
• October 27, 2010: counseling begins at 8:30 AM, room 1575, Judge Kaufman

Please send me an email to indicate which reaffirmation dates you are able to attend.
Many of you have participated in our reaffirmation clinics in the past, and others may be new to the reaffirmation clinic. If you have not participated before, please be assured that we will be happy to provide training. The time commitment for this volunteer opportunity is approximately 2 hours.

At this time of surging bankruptcy filings, the Court is particularly appreciative of the time and expertise contributed by our volunteers. To all of our past and future reaffirmation volunteers, please accept our sincere thanks, and we hope to see you soon.
With warmest regards,

Marisa H. Hawkins
Senior Staff Attorney, Public Counsel
Debtor Assistance Project & Consumer Law Project
mhawkins@publiccounsel.org

October 14, 2010 in Current Affairs | Permalink | Comments (2) | TrackBack

October 13, 2010

Judge Markell Reduces Attorneys Fees from $800,000 to $38,000

brief by my law clerk Elizabeth Massaad:

In re Hotels Nevada, LLC, Inns Nevada, LLC, Case Nos. BK-S-09-31131-BAM & BK-S-09-31132-BAM

Issue:  Are the fees billed by debtor’s counsel in this chapter 11 reasonable, necessary, or reasonably likely to benefit the debtor’s estate?

Holding:  No

U.S. Bankruptcy Judge: Hon. Bruce A. Markell

The law firm of Quarles & Brady, LLP (“Quarles”) was retained by the debtors, Hotels Nevada, LLC and Inns Nevada, LLC, to represent them in their chapter 11 bankruptcy cases.  The cases, filed on November, 5, 2009, were related to a disputed commercial transaction with L.A. Pacific, Inc.  The cases were filed after the debtors and the former principal, Louis Habash, lost an arbitration in California.  The California arbitrator assessed $141 million in damages against the debtors and Habash.  Quarles was given approximately $800,000 as a retainer fee by another company that Habash controlled.
Quarles filed these chapter 11 cases because it wanted to “create a platform for the orderly administration of the [arbitration] Award.”  Also to give the debtors time to evaluate affirmative claims of the estate against the professionals who allegedly caused the debtors’ damage.  The debtors asserted that their former counsel committed professional malpractice in the arbitration proceeding causing the $141 million damage award. This claim against their former counsel was the only asset listed on both of the debtors’ schedules. 

When the chapter 11 cases were filed, the court expressed that the cases were a chapter 7 just “waiting to happen.”  Eventually, the court converted both cases to a Chapter 7.  At the conversion hearing, the court found that Quarles had not acted in good faith in initiating the cases and that the filings were not made in good faith.  Quarles then filed its fee application seeking $803,000 in fees and $77,000 in costs.  The court ruled that most of the services Quarles performed in the debtor’s case were duplicative, unnecessary and not reasonably likely to benefit the debtors or their estates at the time rendered. The court allowed $39,875 in fees and $3,872 in costs. 

Quarles’ exhibits demonstrated that $593,000 of the fees related to the arbitration award and to reviewing and analyzing claims for possible objections.  Quarles asserted that those hours of work were justified because the debtors’ estates were burdened with large claims, and the only hope of recovery was the litigation of the professional malpractice claim against the lawyers who lost the California arbitration.  Even though Quarles invested a lot of time, they produced no results.  They did not file any actions against the alleged negligent lawyers.

The court, in determining if Quarles’ fees were reasonable, pointed out that Quarles was retained by the debtor pursuant to § 327 (a) and therefore, it was allowed to seek compensation for fees and expenses in accordance with § 330.  Under section 330, a court may award to a professional person employed under section 327:

 a) reasonable compensation for actual, necessary services rendered by a professional   person or attorney, and
 b) reimbursement for actual and necessary expenses.

When determining the amount of reasonable compensation to be given to the professional in question, Section 330 provides that the court shall consider the nature, extent, and the value of the services taking all relevant factors into account.  Those relevant factors include: whether the services were necessary to the administration of the case, or beneficial at the time at which the service was rendered.  The court is not allowed to award compensation for unnecessary duplication of services or services that were not reasonably likely to benefit the debtor’s estate or were not necessary to the administration of the case.

Pursuant to the Bankruptcy Appellate Panel for the Ninth Circuit, “the question governing attorney compensation should be whether services were necessary or beneficial at the time at which the service was rendered.” In re Roberts, Sheridan & Kotel, P.C. v. Bergen Brunswig Drug Co. (In re Mednet), 251 B.R. 103, 107 (B.A.P. 9th Cir. 2000).  In practice, this means that “the statute does not require that the services result in a material benefit to the estate in order for the professional to be compensated; the applicant must demonstrate only that the services were reasonably likely to benefit the estate at the time the services were rendered.” Id.

After a review of the authorities, the court reasoned that the totality of circumstances demonstrates that Quarles’ actions were not necessary or beneficial and not reasonably likely to benefit the Debtors’ estate at the time rendered.  Also Quarles’ actions benefitted non-debtors primarily, and the estate only incidentally.  The debtors had no “operations to restructure, and their liabilities consisted of minor unpaid bills and the substantial arbitration award.”  The court found that the Chapter 11 cases were not filed in good faith.

Additionally, the court found that most of the submitted timesheets detailed conferences with Mr. Habash and his other attorneys.  Therefore, most of the actions that Quarles had taken were at the direction of Mr. Habash, and they were not beneficial to the estate. This failure to act in the best interests of the estate is further evidenced by Quarles’ failure to make any material progress toward turning these claims into tangible and beneficial assets of the estate.

The court also noted that Quarles spent a significant time reviewing the record of the prior proceedings.  After that thorough review, Quarles should have realized that any further action aimed at overturning the arbitration award would have been “duplicative, unnecessary, and not reasonably likely at the time rendered to benefit the Debtors’ estates.”  The court found that any amount of time that Quarles spent over 100 hours was useless and a waste of time.  Since Quarles did not specify how much of the $77,448 in costs were due to unnecessary actions, the court reduced the costs by the same percentage reduction administered to Quarles’ fees.

The court also found that Quarles double billed for preparing statements and schedules, so that 38.1 hours of the double billing was disallowed.  The court also did not allow the 133.7 hours that Quarles billed for preparing its employment and fee applications and responding to creditors’ objections to its employment.  The court reasoned that the amount of time needed to prepare fee applications is approximately four hours considering the circumstances of these cases.  Therefore, the court disallowed the remaining 129.7 hours for these categories.

The remaining 480.7 hours were reduced by the court by 95% or 456.7 hours.  Quarles’ remaining costs were also reduced by 95%.

October 13, 2010 in 9th Circuit Briefs | Permalink | Comments (1) | TrackBack

Six Flag Emerges From Bankruptcy With $1.7B Less Debt

Read the article here.

October 13, 2010 in Current Affairs | Permalink | Comments (2) | TrackBack

House to Vote on Exempting Guns From Bankruptcy Claims

Read the article here.

H.R.5827 -- Protecting Gun Owners in Bankruptcy Act of 2010

October 13, 2010 in Current Affairs, Legislation | Permalink | Comments (0) | TrackBack

October 12, 2010

Toni Braxton Bankruptcy

U.S. Bankruptcy Court
Central District Of California (Los Angeles)
Bankruptcy Petition #: 2:10-bk-51909-BR

Assigned to: Barry Russell
Chapter 7
Date filed:   09/30/2010
Debtor
Toni Braxton
1880 Century Park East
Suite 1600
Los Angeles, CA 90067
SSN / ITIN: xxx-xx-0386
aka
Eva Waters
aka
Toni Michele
aka
Michele Lewis
aka
Toni Lewis
dba
Braxtoni Music
represented by Debra I Grassgreen
150 California St 15th Flr
San Francisco, CA 94111-4500
415-263-7000
Fax : 415-263-7010
Email: dgrassgreen@pszyjw.com

Trustee
David L Hahn (TR)
Hahn Fife & Co., LLP
22342 Avenida Empresa, Suite 260
Rancho Santa Margarita, CA 92688
(949) 888-1014

   
U.S. Trustee
United States Trustee (LA)
725 S Figueroa St., 26th Floor
Los Angeles, CA 90017
   

 

October 12, 2010 in Current Affairs | Permalink | Comments (0) | TrackBack

New Owners Oust Philadelphia Enquirer Editor

The editor of The Philadelphia Inquirer has stepped down on the eve of a bankruptcy court's $139 million sale of the newspaper company to creditors.

Read the article here.

October 12, 2010 in Current Affairs | Permalink | Comments (0) | TrackBack

October 11, 2010

Prof. Jean Braucher Article in Arizona Law Review

Good morning Professor Hayes,

We admire your blog here at the Arizona Law Review and we wanted to notify you about the just-released Financial Products issue. In the midst of the government's efforts to step up regulation of financial institutions through the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, Arizona Law Review takes stock of some recent financial markets, programs, and products.

In particular, we wanted to draw your attention to three articles:

-      Humpty Dumpty and the Foreclosure Crisis: Lessons from the Lackluster First Year of the Home Affordable Modification Program. Professor Jean Braucher examines the reasons behind the limited results in the first year of the Home Affordable Modification Program. Braucher’s article reminds us that we are well-served by ex ante regulatory constraints, because it is very difficult to cure a crisis once it has occurred.

-       1,000% Interest - Good While Supplies Last: A Study of Payday Loan Practices and Solutions. Professor Nathalie Martin’s curbside interviews with payday-loan borrowers at the point of sale suggest that the key to the industry’s success is consumers’ misconceptions of the true costs of these loans. Her research also indicates that the business model of payday lenders is to get customers on a debt treadmill, belying industry claims that payday loans are an innocuous way for consumers to deal with emergencies. She concludes by recommending greater regulation through legislation, and particularly recommending a usury cap to reign in these predatory lending practices.

-       Neither Borrower nor Lender Be: The Future of Payday Lending in Arizona. Tying Martin's article to developments in Arizona, 3L member Allison Woolston provides a policy note on Arizona's ten-year experiment with authorized payday lending.

Erin Norris
Arizona Law Review, Marketing Manager
J.D. Candidate, Class of 2012
The University of Arizona College of Law
(480) 612-7805
enorris@email.arizona.edu

October 11, 2010 in Article Reviews | Permalink | Comments (0) | TrackBack

CDCBAA 2010 Calvin Ashland Award Dinner

THE CENTRAL DISTRICT CONSUMER BANKRUPTCY ATTORNEYS ASSOCIATION 
 
Cordially invites you to celebrate with us on Thursday, November 4, 2010 for the presentation of our 2010 Calvin Ashland Award recognizing exemplary efforts affecting consumer debtors to:
 
The Trustee of the Year
Kathy A. Dockery
 
In the Grand Ballroom of the
MARRIOTT LOS ANGELES DOWNTOWN
333 S. Figueroa Street, Los Angeles , CA 90071
 
Reception and no-host bar at 6:00 p.m.
Dinner and awards presentation at 7:00 p.m.
 
$95 for on-time non-members/guests with RSVP and payment received by 10/21/10
$125 non-member/guests RSVP and payment received after 10/21/10
$150 at the door
$75.00 Judicial Officers/Government Employees

Please RSVP by or before October 21, 2010 - email Jazz Ventura at jazz_ventura@yahoo.com

October 11, 2010 in Programs | Permalink | Comments (0) | TrackBack

Judge Dismisses $56M Lawsuit Tied to Twinkies-maker's Bankruptcy

Read the article here.

October 11, 2010 | Permalink | Comments (0) | TrackBack

Toni Braxton Bankruptcy: up to $50 MILLION in Debt

Read the article here.

October 11, 2010 in Current Affairs | Permalink | Comments (0) | TrackBack

October 10, 2010

Bank of America Stops Foreclosures Nationwide

Read the article here.

October 10, 2010 in Current Affairs | Permalink | Comments (0) | TrackBack

MGM on the Verge of Bankruptcy, Asks for Emergency Funds

Read the article here.

October 10, 2010 in Current Affairs | Permalink | Comments (0) | TrackBack

National Conference of Bankruptcy Judges Annual Program Next Week

The 84th Annual Program of the NCBJ will be held in New Orleans next weekend.  You can access the brochure here. 

October 10, 2010 in Programs | Permalink | Comments (0) | TrackBack