Heller’s creditors and at least four groups of shareholders appeared for their first mediation conference on Friday before Judge Randall Newsome for the U.S. Bankruptcy Court for the Northern District of California.
J. Scott Bovitz at Bovitz & Spitzer, a mediator in the bankruptcy mediation program in the Central District of California, said Montali is essentially telling everyone to stand down and cease fire.
“The man can read the tea leaves as good as any bankruptcy judge I know,” Bovitz said.
“I speculate that Judge Newsome has told Montali there is some potential common ground in this case and we need more time to sort it out,” Bovitz said. “I don’t anticipate a long delay, because Newsome is not a patient fellow. That makes him an excellent mediator.”
Bovitz is not involved in the Heller case.
The first hearing on the liquidation plan and disclosure statement had been set for Nov. 9. Montali did not set another hearing date, and removed all deadlines for filing objections, pending word from Newsome. The plan and disclosure require creditors’ approval and are the first steps toward ending the bankruptcy.
“When the court is advised by Chief Judge Newsome that no further postponement is necessary and a revised plan and disclosure statement has been filed, a hearing will be scheduled and objection deadlines set,” the judge wrote in his brief order (.pdf).
The stakes in the mediation are high. Creditors want $150 million from more than 200 of Heller’s former shareholders, claiming the firm fraudulently conveyed that amount to them in 2008, while at least one group of shareholders has hired John Keker of Keker & Van Nest if the case goes to trial, according to confidential mediation briefs obtained by The Recorder.
John Fiero, who represents the Heller estate, declined to comment.
Thomas Willoughby, who represents the creditors committee, did not immediately return a call.
Also on Tuesday, Montali approved a $19 million employee settlement with the estate. The settlement will go into the liquidation plan, which would need to be approved by a majority of creditors.
— Amanda Royal
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Montali did Not approve an employee settlement with the estate. He permitted a notice to go out to ask the ex-employees as a class whether they do or do not support the proposed settlement. This hearing was preliminary. There will be a final hearing later. At that hearing it will be possible to object to the fairness or reasonableness of the proposed settlement. Only at that hearing will Montali either approve or disapprove the proposed settlement.
Posted by: Former Heller Attorney | November 03, 2009 at 08:58 PM