Los Angeles Times
October 14, 2021
A planned foreclosure auction of the largest modern home in the country has been delayed after billionaire lender Don Hankey was accused of maneuvering to take control of the troubled Bel-Air project and leave other debt holders out in the cold.
“The One,” a 105,000-square-foot unfinished mansion once marketed for $500 million, had been set to be sold to the highest bidder Wednesday. The auction was scheduled after developer Nile Niami’s limited liability company, Crestlloyd, defaulted on $106 million owed to Hankey’s real estate lending arm.
But a Los Angeles County Superior Court judge delayed the trustee’s sale until later this month after lender Joseph Englanoff alleged that Hankey reneged on an agreement to have the house completed and sold by real estate brokers, and instead was using the auction process to unfairly take ownership of the mansion or hog the proceeds if it is sold to a third party.
Englanoff, a Los Angeles-area physician and real estate investor who lent $30.2 million to Crestlloyd in 2018 through his Yogi Securities Holdings, states in legal filings that he is still owed $22 million.
Danning Gill Partner John Tedford who worked for a client involved in a dispute with Hankey in another foreclosure case, said he did not think Englanoff would prevail with the argument that Hankey’s entire debt is subordinate to Yogi. However, he said the additional loans were another issue.
“The junior lienholders probably have a good argument that their liens are senior to the new stuff,” said Tedford, who is not involved in the dispute involving The One.
Tedford also told the Los Angeles Times that foreclosure sales typically leave little to nothing for junior lienholders and one possibly requiring a cash bid of $100 million or more could be particularly challenging to draw high bidders.
“What sort of Brinks truck is going to pull up with a briefcase full of cashier’s checks for over one hundred million bucks?” he quipped.
To read the full article, click here: https://www.latimes.com/business/story/2021-10-13/the-one-mansion-auction-delayed
Danning Gill welcomes back Danielle R. Gabai who previously joined the firm as a student law clerk. Danielle is a 2021 graduate of USC Gould School of Law, where she served as President of the Jewish Law Students Association and received her Business Law Certificate.
Prior to law school, Danielle received her B.A. in Business Administration, minor in Finance from the Interdisciplinary Center Herzliya (IDC) in Israel.
At the firm, Danielle assists with the representation of debtors, creditors, and trustees in chapter 7 and chapter 11 cases.
Danning, Gill, Israel & Krasnoff, LLP Partners Eric Israel and Zev Shechtman have been recognized as Legal Visionaries in the Business of Law in the inaugural issue of the Business of Law: Trends, Updates, Visionaries & In-House Counsel Leadership Awards published by the Los Angeles Times. Eric serves as the firm’s managing partner and Zev serves as the partner responsible for recruiting and marketing. Both are recognized leaders in the bankruptcy bar and are sought out as counsel in complex business bankruptcies.
Here’s the link to the Los Angeles Times’ article/website.
Danning, Gill, Israel & Krasnoff, LLP and its Managing Partner, Eric Israel, were recognized in the Restructuring of the Year ($10 million to $50 million) category of the 15th Annual M&A Advisor Turnaround Awards. The recognition is in connection with the firm’s representation of the trustee in the Chapter 11 reorganization of HVI Cat Canyon.
Other firms recognized for their work on the HVI matter were CR3 Partners, Huron Consulting, Kelly Hart, TenOaks Energy Advisors, O’Melveny & Meyers, and Pachulski Stang Ziehl & Jones.
The Annual M&A Advisor Turnaround Awards recognize the leading distressed transactions, restructurings, refinancings, products and services, firms, and professionals in the United States and international markets. The awards will be presented live during the 15th Annual Turnaround Awards Gala on September 29, 2021 during the annual Distressed Investing Summit in New York City.
Danning Gill is pleased to announce that our newest associate, Alphamorlai “Mo” Kebeh, has recently been appointed as Vice Chair of the Beverly Hills Bar Association’s Bankruptcy Section. The BHBA is a nationally recognized organization that is devoted to promoting legal education, establishing public service programs, and leading the legal profession.
Mo’s appointment arrives on the heels of his publication in the California Bankruptcy Journal, in which he wrote about the recent updates to exemption planning under California law. The firm is proud of Mo’s recent achievements and swift involvement in the bankruptcy community!
Danning Gill Partner Zev Shechtman was quoted in Delaware Law Weekly in an article discussing trends that practitioners see or are expecting given the pandemic and the eventual end of government relief and moratoria.
Ellen Bardash and Michael A. Mora
Delaware Law Weekly
August 25, 2021
Bankruptcy attorneys aren’t sure what to expect in the upcoming months as they wait to see the effects a number of pandemic-related factors will have on businesses.
With some COVID-19-related restrictions being lifted recently and making it easier for many companies to get at least partially back to business as usual, there has been a slowdown in filings nationwide throughout the first half of 2021, with an increase just beginning.
But with the looming end to various moratoria and loan forgiveness pro-grams, such as the Paycheck Protection Program that has kept many afloat, paired with the delta variant’s effects and other unknown variables, attorneys aren’t sure if, when or how dramatically that trend might turn around.
“There is going to be a pent-up demand over time. Ultimately that will turn around, but when, nobody knows,” Jerry Markowitz, a founding shareholder at Markowitz Ringel Trusty + Hartog in Miami, said. “I don’t have a clear idea in my head of when that is going to change because for a while now, people have been saying, ‘Well, it’s going to stop and the bankruptcies will be like an open faucet.’ But that has not happened yet.”
While the number of business-related bankruptcy filings across the country was slightly lower in 2020 than in 2019, the District of Delaware saw nearly three times as many filings year over year and was the venue for 8.7% of business filings nationally in 2020, compared with just 3.1% the year before. That jumped to 9.7% at the beginning of this year.
Filings in the first quarter of 2021 were still well above where they were in the two previous years, but Potter Anderson & Corroon partner Katherine Good said Delaware’s bankruptcy court does not necessarily face a bigger flood of filings than other popular venues for bankruptcy litigation.
“Some of the pandemic restrictions have started to lift a little bit, and folks are really looking at what economic trends are going to prevail over the summer and in Q3 and Q4 of this year,” Good said, referring to the third and fourth quarter of the year. “I think what we’ll see over Q3 and Q4 is how the new normal is impacting businesses, and we’ll see some businesses likely have to seek out some form of bankruptcy protection and restructuring work if the new normal is not something that they were prepared for.”
Zev Shechtman, a partner at Danning Gill, said he recently saw filings start to increase again. But bankruptcy practitioners typically estimate to see effects of an economic event about six months after it occurs. The pandemic has also presented a delay that is not currently as predictable, and a spike in filings could occur soon if federal assistance ends and companies who might otherwise have had to file throughout the pandemic end up filing all at once.
“It seems like the uptick in foreclosure-related action and the elimination of foreclosure relief is starting to get folks who probably would’ve filed for bankruptcy a while back to pick up the phone and look at their bankruptcy options because they’re getting notices of default and they’re potentially going to lose their properties,” Shechtman said.
Markowitz said the amount that bankruptcy filings among businesses increase will partially depend on lenders.
“Lots of lenders are more forgiving and more willing to work things out without bankruptcy,” Markowitz said. “Some aren’t, but from my experience recently, more are than aren’t.”
Scott Olson, a partner at Bryan Cave Leighton Paisner in San Francisco, said commercial real estate companies could see more bankruptcy filings if, once the pandemic has ended, companies continue to have employees work from home rather than in office spaces.
Olson added that those in retail, airlines, oil and gas and the hospitality industries could also be among those that end up filing for bankruptcy in higher numbers.
“We do see that companies are increasing their debt loads and some companies have certainly gotten themselves in a bigger hole to climb out of by over-leveraging their companies. We’ll see some challenges in the coming years in certain sectors,” Olson said. “A tick-up in interest rates will drive more bankruptcies down the road. That could cause companies to face more of a cash crunch than they have previously.
July 28, 2021
Erika Jayne opens up about her divorce from Thomas Girardi on this season of ‘Real Housewives of Beverly Hills.’ On the show, Erika decried the use of the word “sham” to describe her divorce. But Variety spoke with Danning Gill Partner Zev Shechtman who said that a divorce used to keep “ill-begotten” funds can be considered part of a sham.
“There can be a completely legitimate divorce where people hate each other and don’t want to be married, where they also use the divorce proceeding as a mechanism to transfer assets inappropriately,” he said.
“I think the two things can be true,” Shechtman said. “She can want to be divorced from him for obvious reasons and there could be sham transactions – or ‘avoidable transactions,’ to use the legal term.”
“The term ‘sham’ is used to refer to $25 million-plus in transactions that ostensibly largely occurred during marriage,” Shechtman added. “The present day divorce may be real. But that doesn’t cure the ‘shams’ of the past.”
He also told Variety that Ms. Jayne may be considering a bankruptcy of her own as her litigation expenses rise. But he pointed out that there are certain types of debts that she may not be protected from, even in bankruptcy.
“Some types of claims, if they are based on, say, fraud, may not be dischargeable,” he said. “So bankruptcy would serve less of a purpose.”
To read the full article, click here.
Los Angeles Business Journal
July 26, 2021
Despite significant worldwide economic challenges caused by the Covid-19 pandemic, bankruptcy filings have been somewhat inconsistent. While consumer cases were largely down, the number of Chapter 11 bankruptcy filings in 2020 has been the highest since 2010—a trend some expect to continue in the coming year.
To better explain current trends facing restructuring and bankruptcy filings, and the options available for businesses experiencing financial difficulties, the Los Angeles Business Journal interviewed Danning Gill Partners Uzzi Raanan and John Tedford. The two identify opportunities distressed companies may have to bring their businesses and finances back on track in an economy that appears to be making a comeback.
Here’s the link to the Business Journal’s website/article:
“Bankruptcy law tries to diversify”
July 12, 2021
Bankruptcy lawyer associations hope to tackle the lack of diversity in the practice by attracting new attorneys.
Both the American Bankruptcy Institute and the Los Angeles Bankruptcy Forum recently launched initiatives to increase diversity in the field.
The Bankruptcy Forum’s President and Danning Gill Partner Zev Shechtman told the Daily Journal, “There’s a need to create a pipeline of diverse professionals in our industry.”
“One of our areas of centration is trying to educate and advocate for careers in our field, among young people, lawyers or people aspiring to be lawyers, but definitely law students who may overlook bankruptcy as a career option.”
Read more here (subscription required): https://www.dailyjournal.com/articles/363488.
June 22, 2021
Danning Gill attorneys Alphamorlai “Mo” Kebeh and Zev Shechtman authored an article for Law360 analyzing Evander Kane’s bankruptcy case pending in the Northern District of California Bankruptcy Court.
According to the attorneys, a recent decision in the case informs that when an individual chapter 7 debtor’s debts are not clearly “consumer” debts and not clearly “non-consumer” debts for purposes of section 707(b) of the Bankruptcy Code, the debtor may be entering a gray area in between the two. Practitioners should closely scrutinize the facts of those gray area debts, as the outcome will partially be dependent on the jurisdiction of the debtor’s residence.
In the U.S. Court of Appeals for the Ninth Circuit, where courts are prone to considering the totality of circumstances, practitioners should pay attention to whether the relevant transaction produced an economic benefit and whether the debtor had any consumptive intent, among other relevant factors. Meanwhile, in the Fourth Circuit, courts harbor a bare-bones interpretation of section 707, focusing only on whether there was profit motive rendering the debt non-consumer. Unless and until the U.S. Supreme Court settles the split, practitioners should pay extra credence to the particular factors relevant in their jurisdiction.
This case also raises interesting policy concerns. The debtor enjoyed an expensive lifestyle, replete with multimillion dollar gambling debts, fancy cars, personal expenses of over $1 million per year and other extravagances not experienced by the average debtor. Notwithstanding his outsized lifestyle fueled by debt, Kane is afforded chapter 7 relief. Meanwhile, individual debtors with much more modest means, but with above median income and primarily consumer debts, are typically subjected to the rigors of chapter 13. This raises basic questions of fairness under the Bankruptcy Code.
To read the full article, click here. (Subscription required)