Securities Fraud Lawyers Blog

Is marijuana legal in your state? Don't count on bankruptcy protection if your weed business fails.

Published on: September 28, 2014 | by Savage Villoch Law, PLLC

By Alfred Villoch, III, Esquire, with Savage, Combs and Villoch, PLLC

A federal judge recently dismissed a bankruptcy case filed by a marijuana business owner in Colorado, according Tom McGhee of the Denver Post. Why? Because marijuana remains illegal under federal law and that causes major impediments in obtaining relief under federal bankruptcy law. See Dkt #74, In re Arenas, Case No. 14-11406 (Bankr. D. Colo. Aug. 28, 2014); see also “Judge denies bankruptcy protection to Denver marijuana business.”

In that case, Mr. Arenas, the debtor in bankruptcy, produced and distributed marijuana in Colorado at the wholesale level. He possessed all of the required licenses and permits to legally produce and distribute marijuana. The bankruptcy court even acknowledged that Mr. Arenas’ marijuana business was perfectly legal under Colorado law. But the court also found that leasing space to a marijuana dispensary and cultivation of marijuana made Mr. Arenas liable for criminal penalties under the the federal Controlled Substances Act, 21 U.S.C. § 801 et seq. (the “CSA”). Because of that, the bankruptcy court dismissed Mr. Arenas’ case upon a motion filed by the United States Trustee.

I filed bankruptcy. What is the 341 meeting of creditors?

Published on: September 27, 2014 | by Savage Villoch Law, PLLC

By Alfred Villoch, III, with Savage, Combs and Villoch, PLLC

This meeting is named after section 341 of the bankruptcy code. It’s usually held about one or two months after you file for bankruptcy. You are required to attend this meeting in order to successfully complete bankruptcy and discharge your debts. Your attorney will attend the 341 meeting with you and will make sure that you are comfortable and prepared. You should bring your driver’s license and social security card.

A trustee is the person who administers your bankruptcy case. The 341 meeting is an opportunity for the trustee appointed in your case to ask you questions generally about your assets, liabilities, and financial affairs. The trustee will investigate possible fraud, genuine mistakes in the paperwork, and will make sure that your paperwork is in full and complete order. The trustee will also speak with you about:

Tampa Bay Business Journal reports that Arigato Japanese Steakhouse, LLC, abruptly closes the doors of its three Tampa Bay restaurants.

Published on: September 20, 2014 | by Savage Villoch Law, PLLC

By Alfred Villoch, III, at Savage, Combs & Villoch, PLLC

Arigato Japanese Steakhouse, LLC, a restaurant with three locations in the Tampa Bay area, including a popular location in the Carrollwood area, has permanently closed its doors, according to Eric Snider with the Tampa Bay Business Journal. The restaurant was founded in 1971 and has been in the Tampa Bay area since 1978.

Mark Douglas with WFLA quotes Arigato’s owner, Dale Del Bello, as stating that he is “currently working very hard and doing everything in [his] power to make good by everyone we are in debt to.” See “Arigato’s owner saddened by his restaurant closures in Clearwater and St. Petersburg.” While this is an admirable quote from the owner, it is likely a hollow promise based on recent filings with the bankruptcy court in Tampa.

Florida's Homestead Exemption: One reason the SEC struggled to collect $62 million from Paul Bilzerian.

Published on: September 18, 2014 | by Savage Villoch Law, PLLC

By Alfred Villoch, III, at Savage, Combs & Villoch, PLLC

Today, the Wall Street Journal ran an article entitled “A Maze of Paper. SEC Judgment against Raider Paul Bilzerian: $62 Million. Collected: $3.7 Million.” In the article, Michael Rothfeld and Brad Reagan write how Paul Bilzerian was a corporate raider in the 1980s who victimized investors, parked stocks in other people’s names, and failed to make disclosures of his interest in other companies, to name a few things. Due to this fraud, Rothfeld and Reagan explain how the U.S. Securities & Exchange Commision (“SEC”) obtained federal court orders for Mr. Bilzerian to pay a whopping $62 million as penalties, but was able to collect only $3.7 million from him.

The WSJ article explores a few methods that Bilzerian used to thwart the SEC’s collection efforts, including moving to another country, but the article touched on one maneuver in particular that is dear to Floridians’ hearts: Bilzerian’s move to Florida to purchase land and build a 28,000-square-foot mansion.

Proposals for settlement in Florida bankruptcy cases: Will a bankruptcy court enforce them and award attorneys' fees and costs?

Published on: September 10, 2014 | by Savage Villoch Law, PLLC

by Alfred Villoch, III, with Savage, Combs & Villoch, PLLC

In Florida, settlement of legal disputes is strongly encouraged. To encourage settlement, the Florida legislature enacted Section 768.79 of the Florida Statutes. Section 768.79 creates a substantive right to collect reasonable attorneys’ fees and costs as “penalties” when a party declines to accept a reasonable proposal to settle. Rule 1.442, Florida Rule of Civil Procedure, provides the method to enforce the proposal for settlement and sets forth the parameters for implementing Section 768.79.

Specifically, Section 768.79 allows a defendant to recover reasonable costs and attorney’s fees if the defendant proposes settlement which is not accepted within 30 days and the defendant obtains a judgment that is at least 25% less than the proposal. Likewise, a plaintiff can recover reasonable costs and attorneys’ fees if the plaintiff proposes settlement which is not accepted within 30 days and the plaintiff obtains a judgment that is more than 25% of his or her offer.

Parents often co-sign for their children's student loans. Should those parents face a less difficult standard in the bankruptcy discharge of their obligation for that student loan debt?

Published on: September 6, 2014 | by Savage Villoch Law, PLLC

By Alfred Villoch, III, Esquire, at Savage, Combs & Villoch, PLLC

In a recent blog post, the Bankruptcy Blawg addressed how difficult (almost impossible) it is to get rid of student loan debt in bankruptcy. See http://www.thebankruptcyblawg.com/?p=26. Yesterday, the Tampa Bay Times published an article entitled “Co-signing a student loan carries risks for parents.” The article addresses how parents can feel a knee-jerk, moral obligation to co-sign for their child’s student loan. But when you co-sign, the parents are on the hook for the debt with equal force as if the loan was theirs alone. And they might not know that their child is not repaying the loan until they start receiving calls and letters from the bank. By that time, the parent’s credit score has very likely taken a dip, noted Mark Kantrowitz in the article.

Not only is the student loan default potentially devastating to the parent’s credit score, but it is virtually impossible to discharge in bankruptcy unless a bankruptcy court finds that the parent meets the Brunner test. See http://www.thebankruptcyblawg.com/?p=26. That means, the parent or the child must repay the entire debt (with interest and late fees, if applicable) or it may haunt the parent and child for the rest of their lives.

Can I get rid of my student loans if I file bankruptcy?

Published on: September 4, 2014 | by Savage Villoch Law, PLLC

By Alfred Villoch, III, Esquire, at Savage, Combs & Villoch, PLLC

Student loans are very difficult to get rid of in bankruptcy. Whether you file bankruptcy under chapter 7 or chapter 13, the test remains the same: you have to prove “undue hardship” in order to discharge or get rid of your student loans. See 11 U.S.C. § 523(8).

But what is undue hardship? Unfortunately, the Bankruptcy Code does not define “undue hardship” or list any ways in which to determine who meets that standard. Instead, bankruptcy courts have been left to make their own definition through case law. In Florida, bankruptcy courts follow the Brunner test. This test requires the court to consider the following three categories or prongs to determine whether the debtor (i.e., the person who filed bankruptcy) has an undue hardship:

If I file bankruptcy, will it stop the foreclosure of my home?

Published on: August 30, 2014 | by Savage Villoch Law, PLLC

By Alfred Villoch, III, Esquire, at Savage, Combs & Villoch, PLLC

If you’re a few months behind on your mortgage payments, the bank that loaned you the money to purchase your home (or alternatively, the company that services the loan) will likely file a lawsuit with the intent to sell your house and use that money to pay down your loan. If the money achieved from the sale is not enough to pay down the entire loan, the bank can still pursue you for the remainder owed or the deficiency. This process is commonly called foreclosure and the pursuit of a deficiency judgment.

If you file bankruptcy before the foreclosure sale, however, you will get temporary relief from the foreclosure. Specifically, upon the bankruptcy filing, you will get the benefit of the “automatic stay,” which stays all actions of your creditors not brought before the federal bankruptcy court, and this will include the foreclosure action. It is important to understand that this stay is often times only temporary and will depend on how active your bank is in pursuing the foreclosure.

Do I qualify for chapter 7? And what is this “means test?”

Published on: August 29, 2014 | by Savage Villoch Law, PLLC

By Alfred Villoch, III, Esquire at Savage, Combs & Villoch, PLLC

Chapter 7 of the bankruptcy code allows you to discharge certain debts immediately upon order of the bankruptcy court. But to qualify for chapter 7, you must satisfy what is called the “means test.” If you cannot satisfy this means test, you must instead file for chapter 13 (or chapter 11). In a chapter 13 case, rather than the immediate discharge of certain debts, the bankruptcy court determines your monthly disposable income and you are required to pay over that monthly disposable income to the trustee for the benefit of your creditors over a 3 or 5 year period.

So what is the “means test” and how do you qualify for chapter 7 for a more prompt discharge of your debts? The initial part of the means test depends on your household income and the number of people in your household. If your current monthly household income is less than the median income for a household of your size in your state, the bankruptcy court presumes that you are eligible to file for chapter 7 bankruptcy. Current Monthly Income is the monthly average of certain income that you (and if you are married, your spouse) received in the six calendar months before your bankruptcy filing. In Florida, the median income for one person is $41,939 for cases filed after May 1, 2014. For two people, the median income is $52,598. You can find more information at: