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Representing Bankruptcy Trustees

Bankruptcy Litigation and Bankruptcy Trustee Representation

Our Experience With Bankruptcy and Bankruptcy Trustee Litigation

Our bankruptcy litigation team has represented clients at both the trial and appellate levels in all kinds of bankruptcy, insolvency, and creditors’ rights litigation, whether in bankruptcy courts or in other forums. Our trustee litigation team specializes in a variety of matters pursued by bankruptcy trustees, including Ponzi-scheme cases involving hundreds of defrauded investors, fraudulent conveyances, other fraud claims, intellectual property claims, actions against aiders and abettors of corporate and individual debtors, and actions against professionals for negligence and malpractice. We have litigated cases across the country, including Colorado, Texas, Arizona, and Tennessee.

About Bankruptcy Litigation

Whether Chapter 7, 11, 13 or Liquidating Trustees, bankruptcy trustees frequently find themselves administering estates that hold unliquidated causes of action that – if successfully pursued – could result in significant recovery for creditors. These causes of action could vary from simple two-party disputes to complex litigation involving multiple defendants and claims. Trustees frequently hire special counsel to prosecute the estate’s claims rather than turn to their general bankruptcy counsel. Special counsel’s engagement can be on an hourly basis or, more typically, on a contingent-fee basis.   Bankruptcy trustees engage special counsel to pursue claims arising in bankruptcy cases – such as preference and fraudulent conveyance claims – but also non-bankruptcy claims including fraud-based claims, securities fraud, legal malpractice, intellectual property disputes, and breach of fiduciary duty. Based upon the nature of the claims and the parties involved, the cases may be filed in bankruptcy court, state court, or other federal trial or appellate courts.

Where We Represent Clients

Our Bankruptcy Litigation lawyers have appeared in courts across the country, including Colorado, Texas, Arizona, Louisiana, Arkansas, Florida, and Delaware.

Our Special Counsel-Bankruptcy Trustee Practice

We represent bankruptcy trustees on an hourly fee basis, a contingent fee basis, hybrid hourly and contingent fee, and other alternative fee arrangements. We endeavor to customize our fee arrangement to accommodate the special needs of insolvent bankruptcy estates so that valuable estate assets can be liquidated.

Click here for more information about our alternative fee arrangements.

Featured Cases

Breach of Fiduciary Duty, Securities Fraud, Aiding and Abetting - In an adversary proceeding filed in the U.S. Bankruptcy Court for the District of Arizona, Susan Hardie Jacks and her team represented the reorganized debtors’ trust formed to pursue claims arising out of a real estate fraud scheme that involved more than 100 institutional lenders and private investors that provided more than $70 million dollars to the debtors or their straw buyers based on fraudulent representations. The defendants were title companies that were sued for (i) aiding and abetting breaches of fiduciary duty, (ii) breaching their contracts, (iii) fraud, (iv) securities fraud, and (v) breaching their fiduciary duty in the handling of over 1,200 title transactions. After five years of litigation, two sets of defense counsel, and two appeals taken by the defendants, the case settled favorably to the Liquidating Trustee. Greenbelt Claims Recovery, LLC v. Transnation Title Insurance Company et al., Adversary No. 09-00218 in the United States Bankruptcy Court for the District of Arizona.

Ponzi Scheme/Real Estate Fraud Litigation – Susan Jacks and her team were special counsel to the chapter 7 trustees of the bankruptcy estates of a real estate developer and his affiliated companies who perpetrated a Ponzi scheme using straw buyers and promises of “guaranteed returns on investment.” The case involved more than 80 defendants, many of which were early investors in the scheme who received repayment of their capital and handsome returns on investment while other late investors and creditors were unpaid as of the bankruptcy filing date. After years of litigation on procedural issues, the Trustee recovered more than $1 million for the estates. Joseph M. Hill, Trustee of Juliet Homes, LLC et al. v. Alex Oria, et al., Consolidated Adv. No. 09-03429, In the United States Bankruptcy Court for the Southern District of Texas, Houston Division.

Breach of Contract and Breach of Warranty. In a chapter 11 case filed in Phoenix, Arizona, Susan Jacks was lead special counsel to a corporate debtor that manufactured electronic goods. The liquidating debtor pursued claims against a Hong Kong circuit board maker and the debtor’s Alabama-based customer based on allegations of faulty design and manufacture. The case settled favorably for the debtor. TFS Electronic Manufacturing Services, Inc. v. Topsearch Printed Circuit Boards and Avocent Corporation, No. 06-01586-PHX-SMM, in the United States District Court for the District of Arizona.

Business Tort – Fraud and Embezzlement – $632,000 Jury Verdict and Non-Dischargeability Judgment. When a private equity fund discovered that the CEO of one its companies was embezzling by selling off-the-books inventory and laundering the proceeds through offshore bank accounts, Michael Mihm and Susan Jacks represented the fund in its lawsuit against the CEO and his wife. After a 10-day trial, a Fort Worth, Texas, jury awarded $632,000 to the fund as compensation for its losses caused by the CEO’s theft. The defendants attempted to prevent entry of judgment by filing chapter 7 bankruptcy, but Susan Jacks and Mr. Mihm obtained relief from the automatic stay to obtain a final judgment and then prevented the CEO’s discharge of that liability in a second several-day trial before the U.S. Bankruptcy Court. International Beauty Products, LLC v. Garth Beveridge, Dinah Beveridge and Craig Beveridge, District Court for Tarrant County Texas, 48th Judicial District; International Beauty Products, LLC v. Garth and Dinah Beveridge, Adversary No. 08-04096, in the United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division

Intellectual Property Ownership, Fraudulent Conveyance and Attorney Malpractice Litigation - Susan Jacks and her colleagues were special counsel to HHCS, a chapter 11 corporate debtor in a case pending in the United States Bankruptcy Court for the Middle District of Tennessee. HHCS had no financial resources to protect valuable intellectual property or to pursue causes of action against former management and other third parties. Susan Jacks’ was part of the trial team that commenced several adversary proceedings on behalf of the debtor and prevailed in the cases that went to trial as well as in a contested plan confirmation hearing:

  • One case was the consolidation of two adversary proceedings, one against the debtor’s former president and another against numerous other companies that were affiliates of the president, in which the debtor sought the declaration of its rights in intellectual property as well as recovery of fraudulent conveyances to former management and its affiliates.   Following a week-long trial, the firm obtained a judgment for over $7 million in cash and a declaratory judgment that intellectual property valued at many millions of dollars was property of the debtor’s bankruptcy estate. The court’s opinion is reported at In re Holcomb Health Care Servs., LLC, 329 B.R. 622 (Bankr. M.D. Tenn. 2004). The judgment paved the way for a handsome settlement among the debtor, the defendants, and other parties interested in the development of the intellectual property.
  • A second proceeding involved HHCS’s malpractice case against the debtor’s former New York counsel, an international law firm. On the eve of trial, the case settled for a favorable sum to the estate in a confidential settlement. HHCS v. [the debtor’s former lawyers, an international law firm]

Fraudulent Conveyance, Preference, and Accountant Malpractice Litigation - In the bankruptcy cases of affiliated chapter 11 debtors based in San Antonio, Texas, Susan Jacks was lead special counsel to the Litigation Trustee, who pursued claims against insiders, the debtors’ largest customer, and a non-debtor affiliate alleged to have received a large part of the debtors’ hardwood milling business through a fraudulent conveyance. The claims also involved preference and fraudulent conveyance claims as well as a malpractice action against the debtors’ accountants, who allegedly misrepresented the value of the companies’ hardwood inventory. The cases settled favorably to the Litigation Trustee. Randolph N. Osherow, Litigation Trustee, v. Donald R. Vann et al., Adversary No. 08-05006, Randolph N. Osherow, Litigation Trustee v. Akin Doherty, Adversary No. 08-05005, in the United States Bankruptcy Court for the Western District of Texas.

Ponzi Scheme/Fraud Litigation - In this corporate chapter 7 bankruptcy case, the chapter 7 trustee engaged Susan Jacks and her firm to represent him in the prosecution of causes of action against the debtor’s insiders and lenders. This Houston bankruptcy case involved the debtor’s sale and marketing of “predictive dialing” equipment and software sold to dentists and chiropractors with a “money back, guaranteed” promise that the marketing package would increase sales. The lenders who financed the professionals’ purchases of the software and equipment were defendants on the basis of their alleged awareness of the debtor’s scam. Susan Jacks and her team secured settlements bringing more than $870,000 into the estate and reducing the claims against the estate by more than $1.3 million. Joseph M. Hill, Trustee of Today’s Destiny, Inc. v. Michael Day et al., Adv. No. 06-3285, in the United States Bankruptcy Court for the Southern District of Texas.

Breach of Fiduciary Duty, Mismanagement - In this chapter 7 case pending in Galveston, Texas, Susan Jacks represented a chapter 7 trustee as special counsel to pursue claims of mismanagement, breach of fiduciary duties, and fraud related to an oil field services business. The case settled on the eve of trial, with the Trustee receiving a substantial payment. Rusty Waldron, Trustee of Marine Professional Services, Inc. v. Thomas E. Cook et al., Civil Action No. H-06-1550 in the United States District Court for the Southern District of Texas, Houston Division

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