Bankruptcy Bits

NYC restaurants filing bankruptcy include Tavern on the Green

In another sign of times, even the wealthy and famous are feeling the effects of the declining economy. In New York City, the owners of a well-known eating institution have sought the protection of the US Bankruptcy Court in the Southern District of New York. The 75 year old Tavern on the Green filed Chapter 11 after its lease was terminated by its present landlord, the City of New York, who has granted a new 20 year at that location to another restaurant, the owners of Central Park Boathouse, commencing January 1, 2010.

Tavern on the Green continues to operate while in Chapter 11, but has said that it may auction off the restaurant’s name, which it claims has a value of $19,000,000. Even with an auction sale, it may not realize enough to pay its creditors in full.

In the misery-loves-company category, another well-known eatery has also filed bankruptcy in NYC. Opened in 1917, the Cage de Artistes closed its doors and filed Chapter 7, not even attempting to reorganize. It was reported by NDP Group, a market research company, that over 500 restaurants had closed this year in NYC.

By: Michael B. Katz, Esq.

Victory for homeowners: the judge who rejects foreclosures when he finds fault in the loan

An article captioned A "Little Judge" Who Rejects Foreclosures, Brooklyn Style, that appeared in a recent edition of The New York Times, describes a judge in New York who, frustrated over the fact that many individuals against whom judicial foreclosure proceedings had been instituted, failed to appear to contest the proceedings, and therefore defaulted, allowing an uncontested order of foreclosure to be entered against the homeowner.

On a review of the pleadings filed in the cases, the Little Judge from Brooklyn discovered that many of the mortgages were defective and unenforceable. He then started to review the pleadings filed in each case, and when the papers clearly evidenced a defective mortgage, the violation of state and/or federal law, or that the foreclosing party lacked standing to commence the action, His Honor simply dismissed the foreclosure action.

The question to be asked is whether the action of the Judge was what some would decry as "judicial activism," or was it the pure rendition of justice? There are those who would either side of this question.

"But what is this esoteric question of judicial philosophy doing in a bankruptcy blog?" you might ask.

Well, to be just, the law must provide meaningful rights and remedies, and some firmly believe that a Court cannot be allowed to be a hand-maiden to unjust results. Being an attorney is a difficult task, all too frequently presenting philosophic, ethical and even moral dilemmas. One must ask one's self if it is ethical, moral or just for an attorney to institute an action to foreclose a real estate mortgage, for example, that he knows or has reason to believe is invalid or vocative of the law?

A good lawyer will question his own client, and in the interest of justice, pursue a course of action that is ethical, moral and just.

What do you think ?

by: Eugene B. Berman, Esq.

Photo Credit: Justice Arthur M. Schack, by: Nicole Bengiveno/The New York Times

Erin Brockovich's former firm files Chapter 11 Bankruptcy

In the “Truth is Stranger Than Fiction” category, there is no longer a happy ending for the law firm that successfully represented Erin Brockovich and made her and others multi-millionaires. The Westlake Village, CA., law firm of Masry &Vitotoe, has filed Chapter 11 bankruptcy, seeking relief from its creditors while it tries to reorganize.

After the death of founding partner Edward Masry in 2005, it was reported that many people had sued both the firm and Masry’s estate, seeking payment of large sums of money. The firm reportedly spent millions of dollars defending itself in the legal actions, eventually forcing it to seek relief under Chapter 11 of the Federal Bankruptcy laws.

In the 2000 movie, which featured Albert Finney as Masry, Brockovitch obtained a $333 Million settlement, and the film itself made over $250 Million dollars. It can be assumed that both Masry and his law firm made a substantial recovery from the plaintiffs’ counsel fees paid to them, as well as fees from the movie, but those amounts were apparently not enough to allow them to weather the storm that followed after Masry’s passing.


 by: Michael B. Katz, Esq.