On March 7, 2014, Jackson Walker litigation partner Scott Wheatley and bankruptcy partner Heather Forrest won a trial victory for a creditor when the U.S. Bankruptcy Court for the North District of Texas granted the creditor’s motion to dismiss with prejudice a bankruptcy filing by the debtor, a former business associate of the creditor.
The bankruptcy case was the latest legal action in a long-running corporate control dispute between Jackson Walker’s client and the debtor over a green energy company that they coβfounded. The dispute has played out in state court litigation and in adversary proceedings in the bankruptcy and U.S. District Court, involving claims of fraud, manipulation, theft of company assets, and breach of fiduciary duty.
During three days of trial before the Hon. Judge Russell F. Nelms, Jackson Walker presented testimony and evidence showing that the debtor engaged in an intentional pattern of deception, abuse of process, and even witness intimidation. The Court issued a lengthy and detailed Memorandum Opinion finding that the debtor repeatedly perjured himself in Court and “had shown himself not to be worthy of belief.” The court also found that the debtor “played fast and loose” in the Bankruptcy Court and in the State Court, failed to disclose his assets and interests, violated the automatic stay, and misappropriated the company’s intellectual property. The Court concluded that the debtor “attempted to manipulate the state and federal court systems in order to gain leverage over, if not cheat, his former colleague.”
In granting the motion to dismiss, the Court stated that it sought “to vindicate the rights of all honest debtors who come before this court,” and that “the court should not, and will not, abide by [the debtor’s] attempt to manipulate the court system of this country for dishonest purposes.”
The successful outcome in the case is a recent example of the strength of Jackson Walker’s Bankruptcy and Litigation practices. Jackson Walker’s Bankruptcy attorneys have a wide range of experience advising clients in connection with complex corporate Chapter 11 cases, reorganization and liquidation proceedings for small business entities and individuals, and workouts. The firm’s Litigation practice is among the largest in the Southwest and was named 2013 Litigation Department of the Year by Texas Lawyer magazine.
