HLNT/NIR update 06/23/2011
Today, NIR's lawyer filed a letter with the Judge asking that the
Judge delay making any decision on "undoing the severance"
because Humphries "might file a Chapter 7 bankruptcy".
The Issue:
The Bankruptcy Trustee filed the motion to dismiss with two options
for the Bankruptcy Judge, to either "Convert the bankruptcy from
a Chapter 11 to a Chapter 7 bankruptcy" or failing to do that, then
to dismiss the Chapter 11 Bankruptcy. It is inconceivable that the
bankruptcy Judge decided arbitrarily to select the option to dismiss
Humphries bankruptcy without confering with Humphries to deter-
mine if Humphries would want to go the route of a Chapter 7 filing.
Therefore, it also inconceivable that Humphries is going to come
back and file a Chapter 7 Bankruptcy on his own.
For those who don't know the difference between the two types of
bankruptcy, a Chapter 11 (herein after called C-11) and a Chapter 7
(C-7). In a C-11 bankruptcy, the filer is asking the courts for protec-
tion from creditors while the filer tries to reorganize their financial
situation. This allows the filer to set up a plan to pay their debts off
in an orderly manner. The plan must be approved by the creditors,
however, but once approval is given, then the filer and creditors
both must live with the plan. This allows the filer to preserve as
much of the filers assets as possible during the bankruptcy. The
filer exits the bankruptcy (usually within six months to two years)
at a point where they can again handle payment of debts without
the protection of the bankruptcy. In a C-7 bankruptcy, the filers
assets are liquidated (except for such items as a homestead [if
one so exists], tools that may be necessary for use in the filer's
trade or employment, and possibly a means of transportation
[provided there is no liens against it]) and the proceeds from the
liquidation are used to pay off creditors depending on the legal
status and senority of the creditors claims. In this case, the
creditors often get pennies on the dollars that is owed to them.
Another note of difference. A C-11 case as has been mentioned
can take up to a couple of years. A C-7 case will only take a 1
to 3 months to complete, depending on the negotiations between
the creditors over how to handle the liquidations and distributions
of the assets.
Humphries did not and does not want to file a C-7 bankruptcy as
the Judge would have converted the C-11 to a C-7 case as
opposed to dismissing the C-11 case entirely.
Interpretation:
This is a indication of both the importance of the Counter Suit by
HLNT and the desperation of NIR, et al, in trying to keep HLNT
from being able to go forward on the suit. The Counter Claims suit
allows HLNT a much greater level of discovery than HLNT would
have under the original NIR suit. It is this broader discovery, and
the allegations of the Counter Suit that NIR, et al, are trying so
desperately to avoid. This is important to them because they (NIR,
et al) know that they will lose if the Counter Claim case goes to
trial. The Counter Claims suit provides the basis for the allega-
tions, and HLNT already has enough evidence to establish Fraud.
So what can be found in the discovery if HLNT is allowed to pro-
ceed? Further proof that supports the allegations that HLNT has
made, which are beneficial to HLNT when it comes to determining
damages and as to whom is to be liable for those damages. In
addition, any information that HLNT uncovers can be useful in
any criminal prosecution of NIR (and thus Ribotsky), Walters
and/or Humphries.
Final Notes:
As the filing of a bankruptcy creates an automatic stay, con-
versely, the dismissal of a bankruptcy automatically lifts the stay.
The Judge has to rejoin the Counter Suit to the Original Suit by
NIR, as there is no longer any reason to sever it. The request of
the lawyer for NIR is irrelevant as the Judge cannot rely on what
"Humphries might be thinking about doing."
As was said in the my prior post, the Judge will hold a con-
ference call to let each of the parties know what is expected
of them going forward.
The opinions expressed herein are my own and each reader
should do his or her own due diligence and make investment
decisions accordingly.
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