July 12, 2012 6:14pm PT by Alex Ben Block
Bergstein, Tutor Lose Appeal in Bankruptcy Case
David Bergstein and Ronald Tutor have lost a round in their legal battle over the involuntary bankruptcy of five companies that Bergstein once controlled, including Capitol, ThinkFilm and their holding company R2D2.
A federal appeals court on Thursday affirmed a ruling by bankruptcy court Judge Barry Russell that gives trustee Ronald Durkin control of R2D2 subsidiary Pangea Media Group, rejecting an appeal by Bergstein, Tutor and companies they control.
U.S. District Court Judge Philip Guiterrez wrote that the bankruptcy court “acted well within its ‘considerable discretion’ to approve the Trustee’s use of R2D2’s property.”
“The Trustee essentially argued that Bergstein could not be trusted as manager of an asset of R2D2, and the Trustee presented substantial evidence to that effect,” continued the appeals court judge. “The evidence included Bergstein’s efforts to conceal R2D2’s ownership of Pangea and Bergstein’s failure to provide financial information about Pangea.”
The appeals court judge repeated statements made by Judge Russell in the involuntary bankruptcy case in explaining his decision: “Unfortunately, given the history of this case, at least in this participation, Mr. Bergstein simply can’t be trusted.”
“The Tutor parties argue that while there may have been sufficient evidence to remove Bergstein as manager of R2D2, there was no basis to grant the Trustee the authority to move Pangea into bankruptcy,” wrote the appeals court judge. “The court disagrees. The Trustee argued that based on the deception of Bergstein and the inability to get reliable information on the assets of Pangea, it was the Trustee's judgment that Pangea needed to enter bankruptcy. The bankruptcy court agreed.”
Calls for comment to attorneys for Tutor and Bergstein were not returned.