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Al Osterheld
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#6751 Post by Al Osterheld » June 19th, 2017, 9:54 pm

The PC bankruptcy claim is ongoing and has not paid out anything to any unsecured creditors (eg, former customers as opposed to, for example, a bank that held a note on their property). The payments that were mentioned earlier in the thread were from the settlement of a separate, now closed, class action lawsuit on behalf of former customers who were told they had purchases available for pickup in their warehouse.

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#6752 Post by Neil Gilmour » July 19th, 2017, 6:54 pm

JIMCOH wrote:
Steven Miller wrote:Made me curious to read a couple of articles on clawbacks. All written in the context of paying back loans. Vs. collecting goods owed. One went down the path that if what he received was more valuable than what was owed, the trustee can go after the difference, not the entire amount.

Messy enough your friend will need to decide what's more expensive and where his risk tolerance lies. Paying for a lawyer (who may not win) or just writing a check to the trustee.


Search on "ordinary course of business" and "new value" exceptions:

http://apps.americanbar.org/buslaw/blt/ ... rson.shtml
Doesn't the Trustee need to request that the Judge compel the payment? I don't think that a letter from the Trustee means squat until the Judge agrees. I know that I wouldn't pay anything to the Trustee unless it was required by the Judge.
But, what do I know. I'm just a civilian.
Trustees usually settle preference claims without a trial. Trials are expensive for both sides and are usually avoided. Getting a bankruptcy attorney to help with a preference claim is often a very good idea as they can identify your defenses. You may consider offering the trustee a nuisance settlement, some very small amount, to go away. Then neither you or the trustee spend much on attorneys.

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#6753 Post by paul h i g g i n s » August 3rd, 2017, 12:26 pm

For anyone who's interested (and still on this thread), the John Fox/Premier Cru saga will be examined on the next episode of the CNBC show "American Greed", which will air next Monday, August 7th, at 10pm EST. I haven't seen the episode yet, but I was interviewed for the show, which contacted me after finding I was the one who wrote David Segal at the NY Times regarding PC.

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#6754 Post by Steven Miller » August 3rd, 2017, 1:21 pm

paul h i g g i n s wrote:For anyone who's interested (and still on this thread), the John Fox/Premier Cru saga will be examined on the next episode of the CNBC show "American Greed", which will air next Monday, August 7th, at 10pm EST. I haven't seen the episode yet, but I was interviewed for the show, which contacted me after finding I was the one who wrote David Segal at the NY Times regarding PC.
tx. DVR set
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#6755 Post by greg gartland » August 3rd, 2017, 1:36 pm

Al Osterheld wrote:I look at the court docket every now and then. It's been clear that the Trustee is trying to claw back so called preference payments from at least some customers who received reimbursement for unfulfilled orders. It's difficult to read the tea leaves from afar, but it appears he's mainly been going after relatively large amounts (or, maybe those are the ones that have made it into the docket). Below some de minimis amount that I forget (but is around $5-6k, as I recall) you're safe from claw backs. The examples I've seen mentioned are typically much higher than that threshold.
I have literally no knowledge of this case, have never looked at the PC docket and never ordered wine from PC, but I know a little about the pursuit of preference claims. The above assumption might prove to be entirely correct, but another possibility is that after the initial efforts are exhausted, the trustee farms out what is left to a different firm to give things a second try. It is not unusual to try to pick off low hanging fruit first then go after everyone else later. I recognize this is not what people want to hear, but my advice is to keep watching your mailbox for legal pleadings if you got some money out of PC prior to it going under.

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#6756 Post by Frances Dinkelspiel » August 5th, 2017, 9:59 am

There are a few videos of the American Greed show embedded in our Berkeleyside story. The producers interviewed Maureen Downey, me, Peter Hellman of the Wine Spectator, Melissa Smith, a former employee, the FBI agent and the Assistant US Attorney who prosecuted Fox, and Fox's lawyer.


http://www.berkeleyside.com/2017/08/04/ ... -john-fox/

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#6757 Post by BLittle » August 7th, 2017, 7:51 pm

Watching American Greed now.... Wow!
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#6758 Post by John Morris » August 7th, 2017, 8:30 pm

Frances Dinkelspiel wrote:There are a few videos of the American Greed show embedded in our Berkeleyside story. The producers interviewed Maureen Downey, me, Peter Hellman of the Wine Spectator, Melissa Smith, a former employee, the FBI agent and the Assistant US Attorney who prosecuted Fox, and Fox's lawyer.


http://www.berkeleyside.com/2017/08/04/ ... -john-fox/
You did a great job of explaining the facts and painting the larger picture, Frances. Nice work!

And the show as a whole was very well done, I thought. As a former PC customer, someone who met Fox many times, a lawyer and a journalist, I didn't find anything to quibble with.
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#6759 Post by Larry Stein » August 7th, 2017, 8:39 pm

Maureen wasn't shown in the finished product. One quibble is always saying PC was located in Berkeley. We all know it was 2 locations in Oakland, then Emeryville, then the store in Berkeley.

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#6760 Post by Paul H Galli » August 7th, 2017, 9:40 pm

John Morris wrote: And the show as a whole was very well done, I thought. As a former PC customer, someone who met Fox many times, a lawyer and a journalist, I didn't find anything to quibble with.
I got to know John pretty well when he was at his Oakland store.
It was he and Hector running the operation.
While I bought some wine from him, we mostly did trades.
We haggled for hours, but we both came away satisfied.
He had a small gym in the back and I remember having a bench press competition with him over a bottle of wine.
All and all, I liked the guy and he never screwed me over.
This was well before he struck it rich and started his Ponzi scheme. (1986 -1990 time frame)
He got what he deserved but there's a bit of me that is sad for him....

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#6761 Post by Steven Miller » August 8th, 2017, 9:07 am

Larry Stein wrote:Maureen wasn't shown in the finished product.
I could see a follow-on story focused on fake wine.
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#6762 Post by jcoley3 » August 8th, 2017, 9:11 am

Frances Dinkelspiel wrote:There are a few videos of the American Greed show embedded in our Berkeleyside story. The producers interviewed Maureen Downey, me, Peter Hellman of the Wine Spectator, Melissa Smith, a former employee, the FBI agent and the Assistant US Attorney who prosecuted Fox, and Fox's lawyer.


http://www.berkeleyside.com/2017/08/04/ ... -john-fox/
Funny to see actual mention of PC staff considering having Fox's own car towed out of the handicapped space in light over the old foofaraw with Paul B. and the Maserati story.
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#6763 Post by Bruce Leiser_owitz » August 8th, 2017, 9:16 am

John Morris wrote:
Frances Dinkelspiel wrote:There are a few videos of the American Greed show embedded in our Berkeleyside story. The producers interviewed Maureen Downey, me, Peter Hellman of the Wine Spectator, Melissa Smith, a former employee, the FBI agent and the Assistant US Attorney who prosecuted Fox, and Fox's lawyer.


http://www.berkeleyside.com/2017/08/04/ ... -john-fox/
You did a great job of explaining the facts and painting the larger picture, Frances. Nice work!

And the show as a whole was very well done, I thought. As a former PC customer, someone who met Fox many times, a lawyer and a journalist, I didn't find anything to quibble with.
I thought Frances also did a very good job providing context & narrative.

I thought they went easy on Fox, and I also thought they spent too much time on the salacious online "dating"/extortion subplot. It seemed like an excuse to put on the screen photos of various young Asian women, some of whom were in various stages of undress. Comparing the unfulfilled customer orders vs. the remaining inventory, that gap wasn't explained by the costs of online "dating."

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#6764 Post by John Morris » August 8th, 2017, 10:11 am

I thought the extortion angle was interesting, particularly since that came to a head just as things were catching up with him at PC. And they left that part till the very end. They played up the cars and his parking in the handicapped spot earlier!
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#6765 Post by Alan Eden » August 9th, 2017, 7:51 pm

Still funny to think of the people who would not question the Premier Cru business model !! he was an out and out crook and douche bag, not a nice man regardless of how he interacted. He ripped people off, he was and is a scumbag who i hope is getting along with his new lover in cell block H
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#6766 Post by Tom K. » August 16th, 2017, 1:28 pm

Board peeps, how does one view the wines that were auctioned off that were in stock at the time of the bankruptcy?

Thanks for any help in advance!

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#6767 Post by c fu » August 16th, 2017, 2:13 pm

Tom K. wrote:Board peeps, how does one view the wines that were auctioned off that were in stock at the time of the bankruptcy?

Thanks for any help in advance!

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i don't think there's a publicly available list. Only to the bidders.
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#6768 Post by Steven Miller » August 16th, 2017, 2:21 pm

Most likely it included these wines (see attached). It's also likely they auctioned off wines being held for customers. That's a tougher list to put together.
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20160307-1 wine in stock at time of bankruptcy.pdf
(694.9 KiB) Downloaded 127 times
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#6769 Post by Tom K. » August 16th, 2017, 3:13 pm

Thanks Steve
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#6770 Post by Al Osterheld » August 16th, 2017, 9:04 pm

I think lists of all of the wines in various categories were eventually published in the court docket, but it would be a little work to reconstruct them.

The docket has been fairly quiet, with most recent activity relating to change of address forms from creditors and applications for administrative expenses for the Trustee and associated support services. More recently, there is a filing of an adversary action to recover $105k from a car dealership for payments made in 2012, 2013, 2015. These payments were apparently made to partially cover purchases of Corvettes for private use, but were drawn on the Premier Cru bank account. One of the notable aspects of this filing is that avoidance of preferential transfers would not normally go back that far, but the Trustee is filing on the basis that the business was already insolvent (a claim for which there is pretty good evidence).

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#6771 Post by Tom K. » August 17th, 2017, 4:26 am

Makes you wonder about people that took other wines to get whole in the months leading up to the br.
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#6772 Post by Arv R » August 17th, 2017, 12:00 pm

Al Osterheld wrote:I think lists of all of the wines in various categories were eventually published in the court docket, but it would be a little work to reconstruct them.

The docket has been fairly quiet, with most recent activity relating to change of address forms from creditors and applications for administrative expenses for the Trustee and associated support services. More recently, there is a filing of an adversary action to recover $105k from a car dealership for payments made in 2012, 2013, 2015. These payments were apparently made to partially cover purchases of Corvettes for private use, but were drawn on the Premier Cru bank account. One of the notable aspects of this filing is that avoidance of preferential transfers would not normally go back that far, but the Trustee is filing on the basis that the business was already insolvent (a claim for which there is pretty good evidence).

-Al
Wouldn't a normal cash for goods kind of transaction be exempt? If he's exchanging cash for a Corvette it seems like that's a different kind of transaction than giving a creditor a special benefit to the detriment of others. I wouldn't think a normal dealer would be lending money, and that if it was a car loan, some financial institution would be involved?
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#6773 Post by Al Osterheld » August 17th, 2017, 8:27 pm

It appears he bought the cars on credit, and these were partial payments against those debts (not cash for goods). So, the argument is that the dealer was just another creditor at a time when the business was insolvent and this creditor was paid when others weren't. Not my expertise, but my understanding is that one of the potential exceptions to a clawback is that the payment was part of the debtor's (PC's) ordinary course of business. But, it's difficult to imagine that using Premier Cru funds to pay off debts for cars purchased for Fox's personal use would qualify as normal business (well, perhaps normal for this business, but that's not the standard). The Trustee offers some other arguments, but I think those are the main ones.

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#6774 Post by Alan Rath » August 17th, 2017, 8:50 pm

If the business was (apparently, and buy Fox's admission) insolvent for over 20 years, how is anything exempt from clawback? Except that I assume there is some statute of limitations.

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#6775 Post by Al Osterheld » August 17th, 2017, 9:06 pm

From what I can tell, there are statutes of limitations, but they depend on circumstances and the prevailing law. That's why we have lawyers and wise and learned judges.

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#6776 Post by Arv R » August 18th, 2017, 2:56 pm

Al Osterheld wrote:It appears he bought the cars on credit, and these were partial payments against those debts (not cash for goods). So, the argument is that the dealer was just another creditor at a time when the business was insolvent and this creditor was paid when others weren't. Not my expertise, but my understanding is that one of the potential exceptions to a clawback is that the payment was part of the debtor's (PC's) ordinary course of business. But, it's difficult to imagine that using Premier Cru funds to pay off debts for cars purchased for Fox's personal use would qualify as normal business (well, perhaps normal for this business, but that's not the standard). The Trustee offers some other arguments, but I think those are the main ones.

-Al
Ok thanks for that explanation. I thought secured transactions were treated differently, assuming the cars were backing the loans.

Pretty bum luck for a car dealer getting tagged with clawbacks from 5 years ago.

It would be hard (I think) for a normal lender to constantly verify that whoever they are getting paid back by the exact same entity as whoever they lent to.

Presumably here they sold the car (and made the loan) to Fox, and then later on, payments were being made by PC wires.

And that's gotten them in to this position....
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#6777 Post by Al Osterheld » September 21st, 2017, 6:54 am

There are a couple of developments in the bankruptcy case. The Trustee is moving to claw back payments PC made to Kaiser Permanente from 2011-2015, presumably for company health insurance (about a half million in total).

The other development is that the Trustee has asked for authority to retain litigation counsel to investigate whether there are Ponzi scheme net winner cases that are economically viable to pursue and, if so, they would be pursued by the outside firm on a contingent basis.

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#6778 Post by Tom K. » September 21st, 2017, 7:12 am

Wow, so for that second part this would be to go after people that colluded with Fox to hold up the scheme?
Al Osterheld wrote:There are a couple of developments in the bankruptcy case. The Trustee is moving to claw back payments PC made to Kaiser Permanente from 2011-2015, presumably for company health insurance (about a half million in total).

The other development is that the Trustee has asked for authority to retain litigation counsel to investigate whether there are Ponzi scheme net winner cases that are economically viable to pursue and, if so, they would be pursued by the outside firm on a contingent basis.

-Al
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#6779 Post by Steven Miller » September 21st, 2017, 11:16 am

Health insurance is a fraudulent transfer that can be clawed back? Any lawyers here care to explain?
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#6780 Post by Al Osterheld » September 21st, 2017, 1:39 pm

I should clarify that, at this point, Trustee just has a subpoena to get records associated with the payments to Kaiser, hasn't filed to claw back any portion.

As far as Ponzi scheme net winners, I believe that refers to customers, not people who colluded with the scheme.

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#6781 Post by John Morris » September 21st, 2017, 1:49 pm

Al Osterheld wrote: As far as Ponzi scheme net winners, I believe that refers to customers, not people who colluded with the scheme.
That was the theory that the Madoff trustee successfully pursued for several billion dollars. The argument there, though, was that there never were any profits to distribute. I'm sure customers here could argue that a retailer who sells goods is not the same as a money management firm that pools assets to invest.
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#6782 Post by R. Smith » September 21st, 2017, 2:27 pm

Steven Miller wrote:Health insurance is a fraudulent transfer that can be clawed back? Any lawyers here care to explain?
Makes you wonder if Mark Bostick, (the attorney for the Trustee), is using any possible opportunity to make money off PC. His firm has already profited to the tune of $962,000 in working this case.

For those interested, here is a copy of the Kaiser subpoena request (reuploaded): https://www.dropbox.com/s/jd7ojb83y8nf9 ... r.pdf?dl=1

Here's the document reflecting the attorney's compensation (reuploaded): https://www.dropbox.com/s/cdfng1ziqf4ty ... n.pdf?dl=1
Last edited by R. Smith on September 21st, 2017, 3:51 pm, edited 2 times in total.
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#6783 Post by Arv R » September 21st, 2017, 3:24 pm

I wasn't able to get the links to open....anyone else had luck with that?
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#6784 Post by R. Smith » September 21st, 2017, 3:52 pm

Arv R wrote:I wasn't able to get the links to open....anyone else had luck with that?

Hey Arv, I just reuploaded the files. Let me know if they open now.
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#6785 Post by Al Osterheld » September 21st, 2017, 7:58 pm

Note the document reflecting the Trustee's firm's compensation is only current through last October. It would be higher, now, although I don't think his compensation has been accumulating as quickly in the past year as in Jan-Oct 2016.

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#6786 Post by Todd Tucker » September 28th, 2017, 12:05 pm

Does anyone know if it is publicly available information who has been subjected to clawback requests. If so, do you how would someone find out the names on the list?

TIA

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#6787 Post by Al Osterheld » September 30th, 2017, 1:23 pm

Todd Tucker wrote:Does anyone know if it is publicly available information who has been subjected to clawback requests. If so, do you how would someone find out the names on the list?
I don't think so. One person reported above that a friend who was a PC customer had received a letter from the bankruptcy trustee requesting he return money because he had received a preferential transfer. But, I don't think anything is reported in the court docket until the Trustee files an adversary proceeding.

There is at least one suit proceeding at the moment against a customer (for something like $239k). Other than the initial filing, the documents from that suit do not appear in the docket for the bankruptcy case (if you have a Pacer account you can look them up). I think there may have been an earlier clawback from one of the wealthy Chinese who had contracted to buy high end Burgundy directly from Fox. But, most of the attempted clawbacks and settlements reported in the docket have been with businesses rather than customers.

As far as the request mentioned earlier to contract with another law firm to evaluate additional customer clawbacks, this showed up in the docket this week:
On September 18, 2017, the Chapter 7 Trustee filed an Application to Employ Diamond McCarthy LLP as Special Litigation Counsel ( “ the Application ” ) (doc. 575). The Court would like to discuss this application with the Chapter 7 Trustee and the proposed special counsel. Accordingly, the Court HERE BY S CHEDULES a hearing on the Application for O ctober 4, 2017 at 10:30 a.m.
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#6788 Post by Todd Tucker » September 30th, 2017, 10:23 pm

Thanks Al,

The reason I asked is that I received a clawback letter last week. Some background: a friend of mine and I usually would get together and wait until we had enough wine to make a pallet worth shipping every 18-24 months. The wine that arrived, I had paid for between 2007 and 2015. Yes, 2007. I am a gullible, stupid person. We were waiting for shipping in October 2015 when weather was good enough that when the pallet arrived, it could sit outside for a couple hours while we could unload it (southern Arizona weather). Unfortunately for me, the pallet we were planning to ship via reefer in early October got delayed until mid October, 80 days from Bankruptcy, and have I received a clawback letter.

I got an email from the trustee last Wednesday. I opened it hoping I was getting a letter saying "Congrats, you are getting back 2 cents on the dollar for your preexisting 5 figure financial loss", but the email was not what I had hoped for. It is very frustrating, and I know many people are worse off than me, but it sucks and this is adding insult to injury, as well a being a significant financial hit. I am certainly not in the realm of the businessman you referenced, but for me it is a real and painful number for wine I had already paid for. I was looking for other people who may be in a similar situation to see what if any legal options we have. I've got no legal training, and basically am trying to find out if this is a fight worth fighting, and if anyone else in in a similar situation. If anyone is, feel free to PM or email me.

Thanks again,

Todd

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#6789 Post by Larry Link » September 30th, 2017, 11:42 pm

If you've taken delivery of wine from PC over the course of many years wouldn't taking delivery of wine from PC in the 90 day window be construed as "Ordinary Course of Business" and be exempt from clawback?

The exceptions are designed to encourage creditors to continue dealing with a faltering company in the hope that bankruptcy can be avoided. The most commonly invoked exceptions are generally known as the "ordinary course of business" and "new value" exceptions.

Ordinary Course of Business
The ordinary course of business exception in 11 U.S.C. § 547(c)(2) is not difficult to understand, though its application is fact-driven and consequently may be difficult to predict and unlikely to be overturned on appeal. The policy underlying the exception focuses a little less on the depletion of the estate, and more on encouraging normal business relationships, which favors creditors who work with struggling businesses. The "ordinary course" defense typically arises in preference claims where a trustee seeks to avoid payments to trade vendors such as utilities, goods suppliers, service professionals, and landlords who routinely provided the debtor with goods and services used in the course of the debtor's business prior to bankruptcy.

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#6790 Post by John S » October 1st, 2017, 5:06 am

I am not a attorney which is likely who you need to consult with before you craft a response. Do not give up.

I would think the following, if true, are worth providing in the response. Demonstrate that your saving wine to be shipped later was normal course of action. Demonstrate you tried to ship this earlier and their delays caused it to fall in the window they are now looking at. Demonstrate that you are still at a net loss with all your PC orders including this shipment.

They will try to clawback where the $$ are larger. Hopefully you barely fall in that category.

Anyhow this advice is worth exactly what was paid unfortunately. Good luck and if you are one of the smaller fish I honestly think that with a well crafted letter and much time you will likely end up OK. The grief and PITA aspect unfortunately may be the wort part when all is said and done.
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#6791 Post by Mike Miller » October 12th, 2017, 4:00 pm

I got a clawback letter claiming a 90 day preference under 11 U.S.C. 547(b) outside “ordinary course of business” today. I’m looking for information on or work product from others who may have already started researching this issue. I hope to speak with a good bankruptcy lawyer here in Texas early next week. But there’s no sense in paying him to do what someone else has already paid for.

Also curious to know if anyone has hired, or knows a good, but reasonably priced, bankruptcy lawyer there in the N.D. Cal. If we have any hope of fighting this, hiring one lawyer to represent a number of creditors seems to be the way to go.

Send PM with your email and we can handle the substantive discussions off board. Joint prosecution/defense agreement would probably be wise, too. I’ll dig one up.

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#6792 Post by Neal.Mollen » October 12th, 2017, 4:04 pm

Mike, if you don't mind me asking, are they trying to claw back a refund you received or wine shipped to you? A significant scale? I am pretty sure I didn't get anything of consequence from them in the last 90 days, and didn't have much owing when they went belly-up
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#6793 Post by Mike Miller » October 12th, 2017, 4:08 pm

The value of wine shipped in the 90 day period is what I read from their letter. There is an unitimized claim from the trustee as to its value and an offer to compromise for a substantial fraction of their claim. Total value is within a few bucks it $9,000.

In an aboundance if caution, I don't want to say too much in the open as I haven’t gone back and checked my records, calendars, etc., but if you have more thoughts you want to share by PM, I’ll be sure to check frequently over the next week.

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#6794 Post by Neal.Mollen » October 12th, 2017, 4:15 pm

Mike Miller wrote:The value of wine shipped in the 90 day period is what I read from their letter. There is an unitimized claim from the trustee as to its value and an offer to compromise for a substantial fraction of their claim. Total value is within a few bucks it $9,000.

In an aboundance if caution, I don't want to say too much in the open as I haven’t gone back and checked my records, calendars, etc., but if you have more thoughts you want to share by PM, I’ll be sure to check frequently over the next week.
Thanks for that. Seems pretty small potatoes to be the subject of such an extraordinary effort.
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#6795 Post by Steven Miller » October 12th, 2017, 4:20 pm

I am betting they are hoping a winning % just roll over and send them a check or make an offer rather than going to the hassle of hiring an attorney.
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#6796 Post by Mike Miller » October 12th, 2017, 7:25 pm

Well, they sue you (or me) in California. Hoping for 1) a default judgment; 2) that my transactions cost in presenting my meritorious defenses, if any, exceed my settlement costs: or 3) that at the very least my defeviency claim is disallowed allowing you other guys to chop up my $0.07 recovery among the multitudes.

And purely coincidentally, the trustee gets to bill for it all. Hard to imagine he’s in it for the money, though, since he’s only made $900,000 plus what he made in the past ten months, if I read correctly. Shit, I obviously made a poor selection when I decided to do personal injury trial law.

And Neal, as for “extraordinary effort,” so far, they’ve 1) had a lawyer write a letter, 2) had a paralegal (or MS-Office) generate a version of that letter with my name on it and plugged in some random dollar figure. And 3) somebody signed or auto-penned a lawyer’s name to it. Hell, if one guy in a thousand pays up, they’re ahead.

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#6797 Post by Dave Nerland » October 12th, 2017, 7:52 pm

One thing any attorney is afraid of is an ethics complaint with the State Bar. Real simple suggestion.

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#6798 Post by Neal.Mollen » October 12th, 2017, 8:11 pm

Dave Nerland wrote:One thing any attorney is afraid of is an ethics complaint with the State Bar. Real simple suggestion.
For what?
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#6799 Post by Mike Miller » October 12th, 2017, 8:29 pm

Zealously representing his client??!!

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#6800 Post by John Morris » October 12th, 2017, 8:44 pm

Mike Miller wrote:Well, they sue you (or me) in California. Hoping for 1) a default judgment; 2) that my transactions cost in presenting my meritorious defenses, if any, exceed my settlement costs: or 3) that at the very least my defeviency claim is disallowed allowing you other guys to chop up my $0.07 recovery among the multitudes.
If you live in Texas, can they get personal jurisdiction over you in California?
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