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A federal judge has granted bankruptcy trustee Ronald Durkin’s request to waive attorney client-privilege and release 14 emails relating to the involuntary bankruptcy cases of Capitol, Thinkfilm, R2D2 and other companies connected to embattled movie financier David Bergstein.
On Thursday, Judge Barry Russell authorized the immediate release of the potentially damaging email exchanges between Bergstein and his lawyers. The reason the emails may be damaging is, according to the filing, that they go to the heart of the trustee’s assertion that Bergstein’s primary financial backer, construction executive Ronald Tutor, was actually an “insider” in the businesses in a legal sense and, as such, should not be treated as an independent creditor.
Tutor is currently the largest creditor in the Bergstein bankruptcy case. If he is declared an “insider,” he would stand to lose million of dollars in claims against the bankrupt companies.
One of the emails, known as Exhibit H in the case, deals with claims that in early 2009 Tutor sold his half interest in R2D2, their primary holding company for the movie interests, to Bergstein. The trustee has presented evidence that Tutor actually did not sell his interests in the movie business until about a year later, after the involuntary bankruptcy case had commenced. The trustee has claimed that Bergstein and Tutor lied in sworn depositions about when they really made that deal.
“Exhibit H contains evidence directly relevant to evaluating whether or not these cases involve an ongoing fraud by the debtors (Bergstein and Tutor) to conceal the identity of one of the…insiders,” Durkin’s attorney Leonard Gumport stated in a filing with the court in support of the motion.
“A central issue in these cases is whether the debtors (Bergstein and Tutor) fraudulently concealed the identity of one of the debtor’s insiders,” adds the filing.
Separately, on Feb. 10, the court denied a motion by Bergstein to reconsider a Jan. 9 ruling which gave Durkin authority to take over Pangea Media Group, which Bergstein had run as his main movie company after the bankruptcy case started. On Feb. 15, Bergstein filed a notice of appeal from the court order.
Despite repeated requests, documents and files related to Pangea have not been turned over to the trustee as of yet.
In a related matter, on Thursday the Judge also granted a motion by the creditors in the bankruptcy case to stop a planned foreclosure sale this month of hundreds of movies owned by Library Asset Acquisition Company, which has been identified as a corporation owned by Tutor. The creditors group, which has put forth its own bankruptcy reorganization, plan, has said those movies are part of the assets from the bankrupt companies and should not be sold. The court set the next hearing on that issue for May 8.
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