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JG

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Reply with quote  #1 
Although bankruptcies are designed so that creditors should not require an attorney, a number of people have been looking for an attorney, as they can serve important roles. The unsecured creditors' committee is in the process of hiring an attorney to represent creditors as a whole, but that attorney would not represent individual creditors.

I got this E-mail from a creditor (neither the creditor nor I are attorneys), who gave me permission to share it. This is not an endorsement or recommendation, just an attorney who is knowledgeable about bankruptcy and already familiar with Bullion Direct.

---

I called the lawyer referral service of the Texas State Bar for central
Texas at: 512-472-8303.

I was looking for a Travis county lawyer who specializes in the creditor
side of chapter 11 bankruptcies.

When I mentioned the name Bullion Direct I was given the name of Stephen
Schultz at 512-472-7792.  According to the central Texas bar, attorney
Schultz has contacted the bar to inform them that he is available to
represent creditors in the Bullion Direct bankruptcy proceeding.  they even
transferred my call to his office phone.

I spoke to attorney Schultz yesterday.  He stated he would be at the
creditors meeting, but that he is not the creditors attorney in the sense
that he has been hired by the Creditors committee. He stated that I was not
the first creditor to contact him, but first with an IRA claim.

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tboll

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Reply with quote  #2 
I don't think it would be practical to have 1 lawyer representing 1 creditor but I also don't think it would be effective to have 1 lawyer representing ALL the creditors.  It would be nice if the lawyers in the area could identify categories of creditors (eg. all BD customers with assets only in IRAs, all BD customers stored metal that was not in an IRA, all customers who payed for Catalog orders but didn't receive metal, all customers who payed for nucleo orders and didn't get anything, all customers who sent in metal for sale but didn't get money or their metal back, etc) and represent a class of creditors.  They could then post which class they represent on your forum or wherever.
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JG

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Reply with quote  #3 
Quote:
Originally Posted by tboll
I don't think it would be practical to have 1 lawyer representing 1 creditor but I also don't think it would be effective to have 1 lawyer representing ALL the creditors.  It would be nice if the lawyers in the area could identify categories of creditors (eg. all BD customers with assets only in IRAs, all BD customers stored metal that was not in an IRA, all customers who payed for Catalog orders but didn't receive metal, all customers who payed for nucleo orders and didn't get anything, all customers who sent in metal for sale but didn't get money or their metal back, etc) and represent a class of creditors.  They could then post which class they represent on your forum or wherever.


If that worked, it would be nice. But I see a couple of problems:

[1] Who pays for the attorneys? What if someone people choose to pay, and some are not willing to? In that case, not everyone in the class would be represented (but some might get benefit without having to pay).

[2] What if that does work for some classes, but not others? That could have negative consequences for the unrepresented classes.

My guess is that the current system is what is going to work -- the unsecured creditors' committee will hire an attorney to represent the unsecured creditors as a whole, and anyone needing any further assistance would hire their own attorney.

Of course, the vast majority of creditors will not be hiring attorneys. As it stands, only about 6% of the creditors are owed enough that the expected payout (listed assets including metal divided by listed claims including metal times amount owed to claimant) would be enough to pay for a single hour of Joe Martinec's time (not that they would pay him, but using his fee as a reference).

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JohnWashburn

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Reply with quote  #4 
I agree with the lawyer per class approach.  As an IRA only "creditor" my interests are significantly different than the interests of a person who shipped metal into the Nucleo exchange for sale.  It make sens that there be a different attorney for each class.

The problem is all attorneys (for both the debtor and the creditors) comes out of the common pot, thus more lawyers at $335/hour the less is the pot at the end of the process with which to pay out the pennies on the dollar to the creditors.  Even so an attorney per class is still likeliest to get the best out come of this debacle. 

I caution "best outcome" is not the same as "good outcome".  The stern of the Titanic was the best place to be on the ship but it was not a good place to be.

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JG

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Reply with quote  #5 
Let me clarify, there are two very different things here:

[1] One or more attorneys representing *every single creditor*. This is the role of the attorney(s) that the unsecured creditors' committee hires.

[2] Individual attorneys. There are at least a handful of creditors that have hired an attorney to represent themselves.

and there is also a third suggestion:

[3] Individuals grouping together to pay attorneys to represent groups of creditors. This is the suggestion that I was saying might be difficult.

If you are looking for help filing a Proof of Claim form, you would hire your own attorney. If you are looking to sue somebody outside of the bankruptcy proceeding, you would hire your own attorney. If you are looking for "hand-holding", an attorney can do that.  If you want some questions asked at the creditors' meeting next week, it might be cheaper to hire an attorney to do so for you than to go yourself.

If you think that someone needs to investigate whether funds went to Charles McAllister, or Company X, then I cannot see why you would hire your own attorney for that, as that would likely be something the attorney hired by the unsecured creditors' committee could do.


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JohnWashburn

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Reply with quote  #6 
Is the unsecured creditors' committee limited in some way from hiring more than one attorney?
Maybe more on point with the hijacking of this thread: Can there be more than one creditor committee for a single bankruptcy proceeding?; e.g. one committee per class?

So many question and so few answers.


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John Washburn
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tboll

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Reply with quote  #7 
Quote:
Originally Posted by JG
 As it stands, only about 6% of the creditors are owed enough that the expected payout (listed assets including metal divided by listed claims including metal times amount owed to claimant) would be enough to pay for a single hour of Joe Martinec's time (not that they would pay him, but using his fee as a reference).



Wow, this is an interesting calculation/statement.  If you switch it around a bit you are saying "As it stands now, 94% of the creditors will not get enough back to pay for even 1hr of the DEBTOR's lawyer's time."  And that's not even covering the cost of the hour of the Dan and his team of financial advisers.  

I guess unlike a typical class-action suit, when it comes to bankruptcies the creditor's lawyer won't likely agree to just accept a fraction of the payout as his fee?
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tboll

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Reply with quote  #8 
Quote:
Originally Posted by JohnWashburn

So many question and so few answers.



So true.  And worse yet, there are even less dollars left to distribute than answers to questions.
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JG

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Reply with quote  #9 
Quote:
Originally Posted by JohnWashburn
Is the unsecured creditors' committee limited in some way from hiring more than one attorney?
Maybe more on point with the hijacking of this thread: Can there be more than one creditor committee for a single bankruptcy proceeding?; e.g. one committee per class?


My understanding is that the unsecured creditors' committee can hire multiple attorneys if it desires. I'm not sure if it would need to (unless just one did not have enough time), as having one attorney for each class of creditors might get awkward. Just a guess.

However, I am pretty sure that a Chapter 11 bankruptcy always has only one creditors' committee.
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roundhouse

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Reply with quote  #10 
If you pay several attorneys for several classes of unsecured creditors you now have friction between the classes, which in and of itself may not be bad, but each attorney will be fighting against the others, as they should, spending much of the assets just in "in fighting". I would do whatever preserves the most assets first and then go toward more independent representation after that.
 
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JG

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Reply with quote  #11 
Quote:
Originally Posted by tboll
Wow, this is an interesting calculation/statement.  If you switch it around a bit you are saying "As it stands now, 94% of the creditors will not get enough back to pay for even 1hr of the DEBTOR's lawyer's time."  And that's not even covering the cost of the hour of the Dan and his team of financial advisers.

I guess unlike a typical class-action suit, when it comes to bankruptcies the creditor's lawyer won't likely agree to just accept a fraction of the payout as his fee?


Part of that "94%" calculation is because there are a ton of claims that are very small (508 are under $1; 3,983 are listed under $450 -- the value of an hour of Joe Martinec's time). The other part is that the Schedules do not include the value of the patent and other IP, as well as the potential claims against third parties (e.g. that might have gotten some of the missing money).

Attorneys are smart. They often take cases on contingency, figuring there is an X% chance of a payout of $Y. Even if they lose cases, the ones that win get them paid for the ones they lose. But here, given that most creditors are not owed much, and the chances of a minimal recovery, it likely wouldn't be worth their while to take a case that way. Plus, they wouldn't have a set task ("Sue John for $X million for doing Y").


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JohnWashburn

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Reply with quote  #12 
It would be very awkward and probably downright ugly; if for no other reason than it is in the interest of each class of unsecured, non-priority, disputed creditors to alter any or all three of those classifications and become: acknowledged, secured, non-priority, unsecured priority disputed, or acknowledged, secured priority creditors.

This quickly becomes the crabs in a bucket problem where it is in the interest of one class of unsecured, disputed, non-priority creditor to throw another class under the bus, and in the interest of every class to insure that no single class of unsecured, disputed, non-priority creditor be reclassified as that means less for the remaining disputed, unsecured, non-priorty creditors


https://en.wikipedia.org/wiki/Crab_mentality

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budetime

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Reply with quote  #13 
I am all for a class action lawsuit if you will where we will all get something, Previous reports said all customers would get 1 /33rd of what they are owed.   Start there I guess. we have to start somewhere. after that lets divide up his assest.  it shows guns, furniture, patents, etc. under his BDI'S ASSESTS.
It all must be taken in the end correct?
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nobody

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Reply with quote  #14 
The 1/33'rd is actually optimistically assuming a flat distribution;

If my reading of 507.a.7 is correct, the first $2775 (as adjusted for inflation) of catalog orders will have priority over the UCC pool - so that money will (assuming they don't lose their priority, and that my reading is correct) likely be distributed first from the pool prior to the division amongst other creditors.

I'm not sure what amount of pending catalog orders there are, but I'd lop that part of the cash equation off (up to the limit per person) first before I divided across the pool, if I wanted to count my chickens before they hatched.


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JG

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Reply with quote  #15 
Quote:
Originally Posted by budetime
I am all for a class action lawsuit if you will where we will all get something, Previous reports said all customers would get 1 /33rd of what they are owed.   Start there I guess. we have to start somewhere. after that lets divide up his assest.  it shows guns, furniture, patents, etc. under his BDI'S ASSESTS.


The Chapter 11 bankruptcy is designed to "reorganize" the company in a way so that creditors get at least as much as they would if everything was sold (liquidated) in a Chapter 7 bankruptcy.

So there is no need to hire an attorney to sell the gun, furniture, patents, etc. That will all get handed by the bankruptcy court.

With The Tulving Company, there was a class action lawsuit against the owner, where his bank accounts were frozen, he could not sell metal, etc. It was eventually closed, but it happened. Nobody has (to my knowledge) gone after Charles McAllister with a lawsuit (either an individual one or a class action lawsuit).

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