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Bankruptcy Court is a world unto itself.
A bankruptcy court, by appearance, looks and feels much like any other court. Many of the rules and procedures are the same or similar to other Federal or State courts. But bankruptcy courts have different objectives from ordinary trial courts. A trial court’s first objective is to fully and fairly resolve disputes the parties bring before it. Bankruptcy courts, on the other hand, have an overriding objective of either, (1) liquidating assets and distributing the maximum amount possible to creditors, or (2) reorganizing assets in a manner that, again, maximizes payment to creditors. While bankruptcy courts also have the goal of providing full and fair resolution of disputes, they place more stringent limits on the litigation process in order to ensure that all of the assets will not be absorbed in the litigation process. For this reason, it is necessary that a lawyer litigating in a bankruptcy court have both a firm understanding and grasp of the general rules used to try cases in all courts and at the same time be totally aware of the nuance and special nature of the bankruptcy process.
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“I Will Follow Him Wherever He May Go.”
Fraudsters and others attempting to avoid accountability, not infrequently, play the “bankruptcy card.” That is, just when a lawsuit against the wrongdoer gets too hot, the wrongdoer runs to bankruptcy court. Amazingly, this often works. That is because the bankruptcy filing invokes the automatic stay which brings everything to a halt and substitutes a new set of rules that requires those in pursuit of the wrongdoer to regroup and rethink the chase. Usually, in substantial cases, this requires the pursuing party to hire bankruptcy specialists to continue the hunt. This additional hurdle may cause some of the chasers to drop out of the race.
As the 1960s popular song says, we “will follow him wherever he may go.” And to continue paraphrasing the song, “no mountain is too high and no ocean is too deep” to keep us away. We might add, neither will a filing in bankruptcy court deter us. Because we regularly litigate in bankruptcy courts as well as state and federal courts, we can and do follow litigation seamlessly to the end.
Likewise, when wrongdoers choose to begin the evasion process in bankruptcy court, we are ready to join them in what they may have thought was their newfound sanctuary.
A Rio Grande Valley Farmer Cheated out of His Corn Proceeds
We recently represented a Texas farmer when a harvesting/grain elevator company refused to pay him for his corn harvest. Because the proceeds from the sale were also claimed by a bankruptcy estate, we pursued this case into bankruptcy court securing a settlement for our client.
Defended a Chapter 11 Debtor’s Counsel From Sanctions
Mr. Green was hired to represent a Dallas attorney who was representing a debtor in a Chapter 11 bankruptcy case in the Northern District of Texas, Abilene Division. Long before our client was hired to file the Chapter 11, a major national corporation represented by a major national law firm had been in a long-term “hate war” with the debtor. When our client, the attorney, was hired to file the Chapter 11 bankruptcy, she had little or no understanding that she was stepping into the middle of this ongoing war. The national corporation filed sanctions on the attorney for wrongfully filing the Chapter 11, ultimately demanding that she be punished to the tune of $300,000. After a trial, the bankruptcy court required our client to pay approximately $12,000. Mr. Green argued to the court that the $300,000 penalty (sanctions) demanded by the national corporation and its law firm was out of proportion because our client’s main “sin,” if any, was unknowingly stepping into this ongoing war.
Represented the Debtor-in-Possession For A Shopping Center Chain
Mr. Green took over as lead attorney for the Debtor-in-Possession of Flato Realty Investments, Inc.; Case No. 92-21329-C-11 in the United States Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, a case with over $15 million in total debt. Mr. Green worked out a proposed plan of reorganization agreement among the creditors which would have reduced and subordinated Flato Investments’ total debt conditioned on the president of the company stepping aside during the reorganization period. Because the equity owners declined to have the president step aside, the proposed plan was never consummated and the company was eventually liquidated.
Represented the Committee of Unsecured Creditors in an Oil Field Case Involving $75 Million in Debt
In the case of In Re: Ted True, Inc., In the United States Bankruptcy Court for the Northern District of Texas, Dallas Division, Mr. Green represented a Committee of Unsecured Trade Creditors made up of companies which had furnished, drilling equipment, pipe, drilling mud, etc. to develop an oil field in the Texas Panhandle. One of the main problems was that Ted True, the owner of the company, had incurred these debts in the name of the company while keeping all of his assets, including the oil field, in his own name and those assets were being administered in another case, In Re: Ted True (Individually). Naturally, the banks which had loaned money were aware that all the assets were owned by Ted individually and, of course, secured liens on all these assets as well as taken commitments to pay their loans from both Ted individually and from his company. After extended litigation over many issues, the Committee was able to remove Ted as debtor-in-possession and have a trustee appointed. The Committee filed a lawsuit asking that the bank debt be equitably subordinated. After that suit failed, the Committee litigated and negotiated a substantive consolidation of the two cases, allowing Committee members to receive more than 21 cents per dollar of their debt.