Amid Erika Janes’ Legal Troubles, Flaunting Her Wealth on ‘Real Housewives’ May Be a Risky Move

Variety

May 19, 2021

In light of the premier of the new seasons on ‘Real Housewives of Beverly Hills’ on Wednesday, May 19, Danning Gill Partner Zev Shechtman spoke with Variety about the risky move reality star Erika Jayne is making appearing on the show in the midst of her soon-to-be ex-husband’s legal troubles including his involuntary bankruptcy.

He told Variety, “If she even is under oath, she’ll have a lot of evidence against her that she’ll have to account for.  So you don’t want your client out there making public statements. And her whole life is a public statement.”

To read the full story click the link below.

https://variety.com/2021/tv/news/erika-jayne-girardi-real-housewives-of-beverly-hills-1234976305/

 

 

 

Administration of Attorney Oath for Alphamorlai “Mo” Kebeh by The Honorable Martin R. Barash

Danning Gill welcomes Alphamorlai “Mo” Kebeh as an associate at our firm and as a newly admitted member of the State Bar of California!  Mo is a 2020 graduate of UCLA Law School.  On April 5, 2021, the firm, along with Mo’s friends and family around the country, had the unique experience of observing Mo’s swearing in ceremony, in which The Honorable Martin R. Barash, United States Bankruptcy Judge, administered the attorney oath, all via Zoom.  The event was a reminder that, even as the pandemic has presented unprecedented challenges, it has also afforded special opportunities for people to connect.

Read about Mo, his recent publications and accomplishments here.

Sarah Danning — First Woman Bankruptcy Trustee in the Central District

LABF CELEBRATES WOMEN IN BANKRUPTCY

As Women’s History Month Comes to a Close, LABF Honored and Recognized Some of the Women Trailblazers in our Bankruptcy Community Who Opened the Door and Set the Path for Today’s Women Practitioners.

FIRST WOMAN BANKRUPTCY TRUSTEE IN THE CENTRAL DISTRICT

Sarah Danning was the country’s and the district’s first female bankruptcy trustee.

Danning began practicing law in Los Angeles a year after she graduated from USC Law School in 1923. In her later years, she recalled the gender discrimination she experienced early in her career, revealing advice she received while applying for her first legal jobs: Never tell any prospective hiring law firm that she was able to type, as law firms were likely to give her secretarial work rather than legal work.

One of her first jobs was with The Local Loan Company in Los Angeles. She later had an office in the Subway Terminal Building, which opened in Downtown Los Angeles in 1925 (designated Los Angeles historic cultural monument #177). She entered the practice of bankruptcy and became the country’s first female bankruptcy trustee.

One of six siblings, she passed her commitment to bankruptcy law on to her brother, Curtis Ben Danning. 17 years her junior, Mr. Danning later became one of the founders of the Danning Gill firm. Sarah Danning worked well into her 80s. After retiring from her practice as trustee, she made weekly visits to the Danning Gill offices, where she drafted wills for her own clients. A Danning Gill staff member who befriended Ms. Danning recalled her as a “spitfire” who always spoke her mind. Another member of the firm described her as “an exceptional woman, intelligent, humorous and kind.”

Sarah Danning was honored by the State Bar in 2003, when Ben Danning accepted certificates acknowledging the siblings’ respective 50 and 75 years of practice, as told in this State Bar posting: click here. Ms. Danning passed away later that year at the age of 100.

 

Can Alamo Drafthouse Battle Back From Bankruptcy and Lead a Moviegoing Revival?

Variety
March 31, 2021
Danning, Gill, Israel & Krasnoff, LLP partner Zev Shechtman
spoke with Variety regarding the movie theater’s bankruptcy.

“Alamo’s challenges mirror those of the entire cinema industry, which has just endured the most punishing 12-month stretch in its century-long history. Can it put its financial house in order while recapturing its pre-pandemic swagger? Will it be able to successfully remind customers of the fun they once had sipping a microbrew and munching on truffle popcorn while watching the latest Tarantino flick? Are its customers so eager to go out and socialize after a year of being housebound that they’ll see anything and everything that hits the big screen, or will COVID-19 prove to be the final nail in the coffin of the theatrical experience?”

Read more:  click here.

Leadership Perspective:
A Bankruptcy Boutique’s View of The COVID-19 Crisis

Law.com’s The Mid-Market Report
February 26, 2021

“Changes in the economy drive bankruptcy filings, even absent major events like a recession or pandemic,” according to managing partner Eric Israel was featured in a Q&A in Law.com’s Mid-Market Report.  The profile was focused on the firm’s success and issues that impact mid-size firms.

In responding to the question about fostering the next generation of legal talent, Eric said, “The next generation is our future. We would all like to see our firms prosper long after we’re gone. To accomplish that, we need to groom our young folks, not just in substantive law (which is also important), but in the ethics of practicing law, marketing and law firm management. All are necessary for a properly working firm.”

Eric P. Israel, Attorney at LawFirm Name: Danning, Gill, Israel & Krasnoff

Firm Leader: Eric Israel, Managing Partner

Head Count: 10 attorneys

Locations: Century City (Los Angeles), California

Practice Areas: business bankruptcy, restructuring, insolvency, debtor-creditor disputes, fiduciary representation, related litigation, mediation

Governance structure and compensation model:  LLP

Do you offer alternative fee arrangements?  Yes, although most of our work is still on an hourly or fixed fee basis.

What do you view as the two biggest opportunities for your firm, and what are the two biggest threats? 

Ironically, first off COVID is proving to be an opportunity for my firm, as we are a bankruptcy boutique firm. Changes in the economy drive bankruptcy filings, even absent major events like a recession or pandemic. The world is presently experiencing significant economic changes with the shift to remote working that I predict will have many long-term ramifications. The transition from brick and mortar to online business that was already underway will only accelerate.  Manufacturers and even service providers will need to adapt or fail. This will also drive down rents for retail and office space, and in turn increase bankruptcy filings by landlords and lenders. Second, changes in technology drive increases in productivity, but they also can cause severe swings in the economy.  For example, the shift away from oil and gas to renewables is affecting the price of oil, which this year crashed and has only started recovering. We have also seen many retail bankruptcies where management failed to shift to online marketing soon enough.

In terms of threats, as a countercyclical practice, the volume of our business typically decreases as the economy grows. Longer periods of economic growth put pressure on insolvency-centered practices. Second, as a boutique law firm, we are only as successful as our relationships. A challenge for an older firm is to maintain strong connections with our historic commerce partners while continually expanding our referral base as both our rainmakers and our clientele age and eventually retire.

There is much debate around how law firms can foster the next generation of legal talent. What advantages and disadvantages do midsize firms have in attracting and retaining young lawyers, particularly millennials? 

The next generation is our future. We would all like to see our firms prosper long after we’re gone. To accomplish that, we need to groom our young folks, not just in substantive law (which is also important), but in the ethics of practicing law, marketing and law firm management. All are necessary for a properly working firm. We actively encourage our younger talent to join us at marketing functions and introduce them to ongoing clients to hopefully keep the relationship strong long term.

To read the full Q&A please click here. (Subscription required)

 

Recent Case Adds to Trend of Courts Allowing Bankruptcy Trustees to “Look Back” as Far as 10 Years to Avoid Transfers When the IRS is a Creditor

In the recent case of Mitchell v Zagaroli, 2020 WL 6495156 (Bankr. W.D.N.C. 2020), 2020 WL 6495156 (Bankr. W.D.N.C. 2020), the bankruptcy court ruled that a chapter 7 trustee under 11 U.S.C. § 544(b) could “step into the shoes” of the IRS as an actual creditor to avoid a fraudulent transfer of property occurring up to ten years prior to the petition date.

Under section 544(b) of the Bankruptcy Code, the trustee of a bankruptcy estate may “avoid” (or colloquially, “claw back”) certain transfers of property.  According to section 548 of the Bankruptcy Code, the reach back period for the trustee prior to the bankruptcy filing to avoid transfers is two years.  However, section 544(b) allows a trustee to avoid any fraudulent transfer “that is voidable under applicable law by a creditor holding an unsecured claim.”  Generally, this has been applied to a trustee employing avoidance powers under applicable non-bankruptcy law (i.e. State law), typically extending the look back period by a few years.  In Zagaroli, the Court ruled that, if the IRS is an unsecured creditor of the bankruptcy estate, the look back period may extend to ten years prior to the petition date.

In Zagaroli, the debtor allegedly transferred multiple parcels of real property to his parents for no consideration in December 2010 and June 2011.  In May 2018, the debtor filed a chapter 7 petition.  The IRS filed a proof of claim in the debtor’s case.  Thereafter, the trustee filed an action to avoid the debtor’s 2010 and 2011 transfers to his parents.  The trustee claimed that section 544(b) allowed the trustee to use section 6502 of the Internal Revenue Code to avoid transfers as far back as ten years before the debtor’s petition filing.

To determine the merits of this claim, the court relied on the plain meaning of Bankruptcy Code section 544(b).  As the IRS had an unsecured claim in the debtor’s estate, the court determined that the plain language of section 544(b) allowed the trustee to “step into the shoes” of the IRS (an “actual creditor”) and use section 6502 of the Internal Revenue Code to avoid the debtor’s real estate transfers.  To support this conclusion, the court relied heavily on In re Gaither, 595 B.R. 201 (Bankr. D.S.C. 2018), which determined that section 544(b) similarly permitted the trustee to step into the IRS’s shoes and that courts should not look beyond the plain meaning of this provision.  Zagaroli cited other cases as well and characterized this as the “majority rule.”

It does appear that the majority of cases in the nation ruling on this issue have come to the same conclusion as Zagaroli, though some courts have disagreed.  For example, in In re Vaughan Co., 498 B.R. 297 (Bankr. D.N.M. 2013), the court relied more heavily on congressional intent and determined that a trustee should not be permitted to use the unique powers of the IRS.  The Vaughan Co. court opined that the federal government was not meant to be used as a “mere conduit for the enforcement of private rights which could have been enforced by the private parties themselves.”  Id. at 304 (citing Marshall v. Intermountain Elec. Co., 614 F.2d 260 (1980)).  Thus, under this court’s analysis, a trustee could step into the IRS’ shoes but would still be barred by the state’s statute of limitations, unlike the IRS.  Id. at 305.

Despite the few opposing decisions, the holding in Zagaroli suggests that courts are continuing to extend trustees’ avoiding powers by extending the look back period when the IRS is an unsecured creditor of the bankruptcy estate.  At this time, however, there is no binding authority on this issue from the Ninth Circuit.

How a bankrupt fleet now has 100 drivers

Transport Dive
February 10, 2021

Before the pandemic, the trucking industry faced rising costs, evolving compliance mandates and multiple other challenges.  Many fleets struggled; some filed for bankruptcy — according to Broughton Capital, 640 of them in the first half of 2019.

Then, along came COVID-19, and many of the smaller trucking companies couldn’t pivot as fast as the larger ones, to meet the demand for essential goods.

They didn’t have the right equipment, enough trucks, good contacts.  So, they lost out, and many went out of business in 2020.  What would have happened if these smaller trucking fleets had instead filed for Chapter 11 bankruptcy?

It depends, said Zev Shechtman, a partner at Danning, Gill, Israel & Krasnoff.  “What happens hinges on how the company is situated — if it’s still allowed to operate, has the cash to operate and how deep in the hole the fleet is,” Shechtman said.

To read more insights from Zev in this  article, click on the link here.

Debtors Beware: Exemption Planning in California Now Subject to Challenge

Nearly two decades after the Ninth Circuit ruled that debtors could protect their assets from creditors by converting them to exempt status before they file for bankruptcy, the Court of Appeals for the Second District of California has determined that such a transmutation may be challenged as a fraudulent conveyance under California law.

In Nagel v. Westen, 59 Cal. App. 5th 740 (2021), Nicole Nagel (“Nagel”) received a 4.5 million dollar arbitration award against Tracy Westen and Linda Lawson (“Sellers”) as a result of the Sellers’ failure to disclose material facts about a home they sold to Nagel.  To protect their assets, the Sellers applied the proceeds of the sale to a home in Texas (with a high homestead exemption) and a variety of investments in Nevada and Minnesota.  In response, Nagel sought to unwind those transactions under California’s Uniform Voidable Transactions Act (“UVTA”).

The primary issues before the court were: (a) whether the Sellers’ transactions constituted “transfers” within the meaning of the UVTA, and (b) if they were transfers, whether those transfers were fraudulent.  The trial court dismissed the claims as failing to state a claim for relief, and this appeal followed.  The appellate court noted that the UVTA defines “transfer” as “every mode . . . of disposing of or parting with an asset or an interest in an asset.” Cal. Civ. Code § 3439.01, subd. (m).  The court in Nagel determined that physically relocating property and transmitting sale proceeds out of state and then transmuting the proceeds into a different form is a mode of “parting with assets,” constituting a transfer per the definition in the UVTA.  Nagel, 59 Cal. App. 5th 740.  To support its reasoning, the court further explained that manipulating property to evade creditors would contravene the UVTA’s stated purpose “to prevent debtors from placing, beyond the reach of creditors, property that should be made available to satisfy a debt.”  Nagel distinguished as dicta language from the California Supreme Court in Kirkeby v. Superior Court, 33 Cal. 4th 642, 648 (2004), that a “transfer” requires the conveyance of an interest to a third party.  Id. at 648.

We believe that the decision in Nagel does not bear on the Supreme Court’s decision in Law v. Seigel, 571 U.S. 415 (2014).  There, the Supreme Court ruled that trustees may not rely on federal law to deny an exemption on grounds outside the scope of the Bankruptcy Code, but they may apply state law to disallow state-created exemptions.  Id. at 425.  It does, however, conflict with the Ninth Circuit’s ruling in Gill v. Stern (In re Stern), 345 F.3d 1036, 1045 (9th Cir. 2003), which held that the conversion of a debtor’s assets from non-exempt to exempt status on the eve of bankruptcy is not sufficient to qualify as a fraudulent transfer as a matter of law.

This decision could significantly affect a debtor’s strategies before filing for bankruptcy.  The practice of exemption planning, whereby debtors organize their financial assets to maximize the amount of property protected in bankruptcy, must be done more circumspectly following Nagel.

Daily Journal Article on Bankruptcy Venue Reform

DAILY JOURNAL
November 23, 2020
By Zev Shechtman, et al.

It’s time for Congress to address bankruptcy venue

What do the Dodgers, American Apparel, Rubio’s Fish Tacos, California Pizza Kitchen, MGM Studios, and Pacific Sunwear have in common?  Each is an iconic Southern California brand.  But that’s not all they have in common.  These companies are members of a growing list of California companies that strategically elected to file for bankruptcy outside of California.  By filing for bankruptcy in faraway states, they deprived local employees, vendors and creditors from participating in the bankruptcy process.  Read more —

 

Danning Gill Represents Chapter 11 Trustee
in California Oil and Gas Bankruptcy & Sale

LOS ANGELES – Danning, Gill, Israel & Krasnoff, LLP represented  Michael A. McConnell, the Chapter 11 trustee (the “Trustee”) for the estate of HVI Cat Canyon, Inc. (“HVI”), which owned approximately 1,000 oil wells, most of which were idle or not performing.  The $26.75 million sale of the oil and gas assets located in Santa Barbara and Kern Counties closed on October 26, 2020.  HVI is affiliated with Rincon Island Limited Partnership that went through its own bankruptcy commenced in 2016.  The Trustee also closed a second sale for oil wells located in Orange County.  The Trustee was represented throughout by Danning Gill Partner Eric P. Israel.

The HVI bankruptcy case was filed in the Southern District of New York on July 25, 2019, transferred to the Southern District of Texas, and then transferred to the Northern Division of the Central District of California.  The Bankruptcy Court directed the appointment of a Chapter 11 trustee on motion by the State of California and others.  The Trustee was able to procure post-petition financing via a series of loans from the main creditor, UBS AG, and ultimately borrowed approximately $13.5 million.  With those funds, the Trustee operated the company for approximately one year.  During that time, the global price of oil crashed due to a price war between Russia and Saudi Arabia, and the effects of the COVID pandemic on global demand for crude oil.

In order to improve marketability of the company, the Trustee converted the company into a stand-alone vehicle instead of being part of a conglomerate of affiliated entities.  As part of the process, the Trustee rejected contracts with insiders and affiliates that had provided office space, equipment rentals, back office services and even sales of its product, replacing those arrangements with insiders and affiliated entities to third party vendors at market prices.

According to Mr. Israel, “The sale was complex, requiring settlements with numerous diverse parties in interest, including over 500 mineral owners, numerous governmental regulatory agencies and several secured creditors, and the County of Santa Barbara for many millions of dollars in real property taxes owed.  Ultimately, the mineral owners agreed to waive pre-petition back royalties of about $13 million in order to procure a responsible new operator.”

UBS was represented by O’Melveny & Myers, LLP.  The Official Committee of Unsecured Creditors was represented by Pachulski, Stang, Ziehl & Jones, LLP.  CR3 Partners was the Trustee’s financial analysts.