March 09, 2011 6:26pm PT by Alex Ben Block
David Bergstein Loses Appeal to Have Lawyers Disqualified (Exclusive)
A federal judge on Wednesday denied an appeal to disqualify the lawyers who successfully led the legal battle last month that forced Capco, Capitol, Thinkfilm and other companies controlled by embattled film executive David Bergstein into bankruptcy.
The denial of the appeal by the U.S. District Court for the Central District of California did not directly address the final ruling by bankruptcy court Judge Barry Russell that put Bergstein's primary movie companies into involuntary bankruptcy. It was a ruling on an earlier effort to overturn the case based on Bergstein's former lawyer, Susan Tregub, having switched sides to work with the law firm of Levene, Neale, Bender, Yoo & Brill, which represented Aramid Entertainment Fund and more than two dozen other creditors who brought the involuntary bankruptcy case last year.
Bergstein's lawyers had asked that the Levene firm be disqualified, a request that Judge Russell denied in October. They had also asked that the court-appointed trustee, Ronald Durkin, be given control of only one of the five cases, and not all five, as Russell had ordered.
Bergstein's lawyers had argued then and in the appeal that the Levene firm had "acted in concert with Tregub, knowingly (using) confidential information to prepare the involuntary bankruptcy petitions."
District Court Judge Philip Gutierrez, in denying the motion, agreed with Russell's opinion that "there was no transfer of confidential information ... sufficiently material to the case to ... support disqualification." He also said that there was no need to change Russell's ruling that Durkin could act as trustee over all five of the bankrupt companies.
Wednesday was also the legal deadline to file an appeal of Russell's Feb. 9 final ruling in the case. Attorney Joseph Eisenberg, who represented Capco and other entities in recent months, said late Wednesday afternoon no appeal had been filed. He would not say whether any additional action was being contemplated.