Bankruptcy Law

11th Circuit reverses bankruptcy sale, criticizes lawyer

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The Atlanta-based 11th U.S. Circuit Court of Appeals has reversed a 2010 bankruptcy in a case involving allegations of collusion by business partners and accusations that a bankruptcy lawyer failed to turn over emails about the plan.

In a per curiam opinion, the 11th Circuit said late-disclosed emails supported claims of a partner in Global Energies, Joseph Wortley, that two other Global Energies partners hatched a plan to file an involuntary bankruptcy petition in an effort to wrest control of the business from him, the Daily Business Review reports. Global Energies’ assets were ultimately sold to one of the other partners and his company after they paid creditors and court costs, the story says.

The opinion (PDF) cited June 2010 emails produced in March 2012 appearing to show that the two partners “colluded in filing for involuntary bankruptcy and that they had testified falsely about that plan in their earlier deposition.”

The opinion alleged that Fort Lauderdale bankruptcy lawyer Chad Pugatch had received some of the emails and had known of them, but he did not turn them over in response to a discovery request by Wortley. Instead, the opinion said, Pugatch had asserted that all responsive, nonprivileged documents had been produced.

The 11th Circuit also said that Pugatch represented one of the apparently colluding Global Energies partners in a deposition in which the business partner said there had been no conversations about filing involuntary bankruptcy. Having participated in the email discussions, the opinion alleged, “Pugatch knew that testimony was false, yet he did nothing to correct it or to remedy the early failure to produce” the email messages.

Pugatch strongly denies wrongdoing, the Daily Business review says.

Lawyers in the case told the Daily Business Review that the emails were provided by lawyer Steven Lippman, who briefly worked for Pugatch after a previous stint at the now defunct law firm Rothstein Rosenfeldt Adler. Lippman was disbarred in September 2012 after he pleaded guilty in May 2012 to helping Ponzi schemer Scott Rothstein make illegal campaign contributions.

Pugatch told the Daily Business Review he had directed Lippman to produce the emails, and he did nothing wrong. “I have practiced in this town for 37 years and I have a stellar reputation,” he said. “I have never and would never hide evidence from a court and I have never and would never commit perjury.”

Pugatch plans to file a petition for rehearing. “The 11th Circuit went beyond the issues in the appeal and focused on something they picked up in that docket to not give ourselves the opportunity to defend ourselves or give all the facts,” he told the Daily Business Review. “They are drawing conclusions about what happened from a record that was not created for that purpose.”

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