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Los Angeles Bankruptcy Court Dismisses Tech Entrepreneur’s Case Because of Missed Deadline

708452_62978186A bankruptcy judge in Los Angeles dismissed a Chapter 7 case filed by the founder of a well-known technology website, finding that the debtor missed a filing deadline. In re Minor, No. 2:13-bk-23787-TD, order and notice of dismissal (Bank. C.D. Cal., Jun. 13, 2013). The debtor, who claimed debts approaching $100 million in his May 2013 petition, filed the required documents several days late and moved the court to reinstate the case. The case demonstrates the complexity of many bankruptcy filings, particularly for those with large estates, and the critical importance of filing deadlines and other court rules.

The debtor, Halsey Minor, filed for Chapter 7 bankruptcy on May 24, 2013. Minor founded the technology website CNET, and he sold his interest in the site to CBS Corp. in 2008 for about $1.8 billion. He reportedly began having financial troubles at least as early as 2009 or 2010, when he started paying debts by selling off his art collection. A bank obtained a $21.6 million judgment against Minor for an unpaid loan in 2009, and a court granted the auction house Sotheby’s a $6.6 million judgment against him in 2010 for unpaid auction items. In his Chapter 7 filing, Minor claimed between $10 million and $50 million in assets, with $50 million to $100 million in debt. Most of the debts are allegedly business-related, rather than related to personal assets or expenses.

A Chapter 7 bankruptcy allows discharge of most debts after payment of as much of the debt as possible, often through liquidation of a debtor’s assets. A trustee, appointed by the court, has the authority to manage and sell those assets. Federal bankruptcy rules require the debtor to file certain documents with the court within fourteen days of filing a petition for bankruptcy protection. In a Chapter 7 case, this includes a statement from the debtor and schedules detailing the debtor’s assets and liabilities, income and expenses, pending contracts and leases, and other financial information. Fed. R. Bank. P. 1007(b). Any extension of time for filing these documents must be approved by the court, with notice to the trustee. Id. at 1007(a)(5).

Because Minor filed his Chapter 7 petition on Friday, May 24, 2013, his deadline for submitting his statements and schedules was Friday, June 7. The court held on June 13 that he missed this deadline, and it dismissed the case. This had the effect of lifting the automatic stay and dismissing any pending motions. Minor filed all of the required papers by June 13, and moved to vacate the dismissal on June 14, citing a local rule that allows the court to vacate a dismissal if the movant “establish[es] a sufficient explanation why the documents were not timely filed.” C.D. Cal. Loc. Bank. R. 1017-2(c)(1). He argued that the documents were not submitted by the deadline because not all information needed for the Statement of Financial Affairs was available by that date. Minor, motion to vacate at 1-2 (Jun. 14, 2013).

People who find themselves in financial distress may be able to find relief through the bankruptcy system, which can provide them with a way to restructure their bills, or even to discharge their debts. Bankruptcy attorney Devin Sawdayi has practices in the Los Angeles area since 1997, helping countless clients through the process of personal bankruptcy. To schedule a free and confidential consultation, contact us today online or at (310) 475-9399.

Web Resources:

In re Minor (PACER registration required), No. 2:13-bk-23787-TD, Bankruptcy Court, Central District of California

Local Bankruptcy Rules (PDF file) of the United States Bankruptcy Court for the Central District of California

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The Four Bankruptcies of Donald Trump, Los Angeles Bankruptcy Lawyer Blawg, June 12, 2013

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Celebrities in Los Angeles and Elsewhere Seek Bankruptcy Protection, Too, Los Angeles Bankruptcy Lawyer Blawg, June 7, 2013

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