Attorney Pays Steep Price for Unauthorized Filing

Attorney Pays Steep Price for Unauthorized Filing

When dealing with the Soviet Union, Ronald Reagan famously quoted the Russian proverb "trust but verify." An experienced bankruptcy lawyer from Las Vegas would have avoided a lot of trouble if he had heeded this advice. In re Blue Pine Group, Inc., No. BK-S-09-13274-BAM (Bankr. D. Nev. 10/7/10. You can find the opinion here. (PACER registration required).

What Happened

Blue Pine Group, Inc. was a Nevada corporation with ownership split 50/50 between a California group and a Las Vegas group with a four person board of directors. The two shareholder groups didn't get along, resulting in a suit filed by the California group. The Las Vegas group "retaliated" (the Court's word) by hiring a bankruptcy lawyer to file chapter 7 for the company.

Under the Local Rules of the Bankruptcy Court for the District of Nevada, a bankruptcy petition for a corporation must be accompanied by a copy of a board resolution authorizing the filing. The attorney did not have one, but was assured by the attorney for the Las Vegas faction that the Board had in fact passed a resolution. This turned out not to be true.

Pressed by the Las Vegas faction to get the case on file in order to stop the Californians from looting the company, the Debtor's attorney filed a set of schedules and a statement of financial affairs. The Clerk assigned the filing a case number even though no petition had been filed. The Debtor's attorney also filed a "Declaration re: Electronic Filing of Petition" in which he swore under penalty of perjury that the filing was authorized.

Read the entire article at A Texas Bankruptcy Lawyer's Blog, a blog by Stephen Sather