1 Global Capital Files a Slew of Adversary Proceedings

Once in a while an attorney sees a bankruptcy and sees less a legal procedure than a complete mess. 1 Global Capital LLC is currently under Chapter 11 bankruptcy in the Florida Southern District Federal Court, the Honorable Raymond B. Ray presiding. Pertinent to this article is Chapter 11 – “reorganization bankruptcy” – proceeding designated case number 18-19121. Filed on July 27, 2018, the company retained BigLaw firm Greenberg Traurig LLP and restructuring specialists Development Specialist Inc. to shepherd it through reorganization. To date, there are over 1,000 separate entries on its DocketBird entry.

Start from the Beginning

The problems for 1 Global Capital go a lot further than needing the protection of the bankruptcy courts. The company is under investigation by the SEC with allegations that include some pretty big issues.

• The offer and sale of unregistered securities. Unregistered securities have not been registered with the SEC and therefore may not be sold as would a public offering. They may be sold privately or institutionally but may not be offered to the public for sale. Confusingly, some securities are exempt from registration, but only under particular regulations.
• The sale of securities by unregistered brokers. Stockbrokers and dealers must register with the SEC as well as being registered with FINRA. Unregistered stockbrokers are violating the law and can be held personally responsible – in an act called forced rescission – which forces disgorgement of earned commissions in order to pay back investors should and offering fail, be and banned from raising future capital.
• Commission of fraud in connection with offering, purchase, and sale of securities.

Ouch.

Additionally, the office of the US attorney for the Southern District of Florida has undertaken a parallel investigation into these activities, and 1 Global Capital LLC is also the subject of investigations by other state attorneys general where investors either provided loans to or were solicited to provide loans to 1 Global Capital. Back in February, the United States District Court of the Southern District of Florida ruled that 1 Global’s memorandums of indebtedness and syndication partnering agreements were actual securities – albeit unregistered ones – that were sold to in excess of 3400 investors. Further issues are the criminal charges and SEC violations brought against Alan Heide and Carl Ruderman, the so-called “largest cash advance in history” to a now-defunct auto group, and

Searching for 1 Global Capital LLC is guaranteed to bring you a slew of paid Google ads at the top of the search results – all of them for law firms soliciting people who either made loans or invested in the company. With the addition of filing for bankruptcy and the filing of multiple adversary proceedings, this is what in legal terms is called receptaculum ignis – a dumpster fire.

Adversarial Proceedings: What Are They?

If you have read this walk for some time, you know what the automatic stay is and what it does. It means that your creditors cannot continue to pursue actions against you, whether that is garnishment, lawsuits, collections, or repossessions. However, the person or entity in bankruptcy can still sue from that position when money is owed. In these cases, the goal is to recover money and property in what is called a 542 turnover. Under this proceeding in Chapter 11, debtors who have deaths outstanding to the entity in bankruptcy can be sued to turn over money or property owed. However, the money or property does not enter the possession of the entity but instead is turned over to the US trustee. At present, there are adversarial proceedings recorded on the docket, with others being filed against local companies such as GTW Construction in Miami, Illuminex Technologies. However, that may change if the proceedings uncover more debts owed to 1 Global. Yes, this is absolutely legal, and even when a company is in bankruptcy, the trustee must be paid what they are owed to settle debts owed by the entity to others.

Look at It Objectively

Yes, it’s a dumpster fire for all of the reasons listed above. However, every entity filing for bankruptcy has the right to be paid the money legitimately owed just as much as the creditors for the entity have a right to be paid money that they are legitimately owed. Facing a 542 turnover can be a frightening prospect for which you not only need an attorney, but an attorney who understands all of the ins and outs and ups and downs of bankruptcy proceedings. Likewise, if you are contemplating bankruptcy and the depth that you are owed are a legitimate factor in that position, you have every right to pursue a 542 turnover. Again, you will need more than an attorney, you will need an attorney who understands bankruptcy – and that is a bankruptcy attorney.

The Dumpster Burns On

This case is not going to get any simpler, but whether you have multimillions of dollars in claims against you, or you are simply unable to get on top of your business’ debts, Chapter 11 is a choice to reorganize, pay down your creditors, and pursue money or property that you’re rightfully owed all while under the protection of the automatic stay. 1 Global is currently enjoying the protection of the automatic stay. However, the automatic stay does not prevent the criminal and regulatory proceedings which 1 Global currently faces. We will keep you updated on any new and interesting developments.

Get Help from Bankruptcy Attorneys

You do not need Greenberg Traurig retainer fees to get a good outcome on your bankruptcy filing. Whether you are a sole proprietor, LLC/LLP, or a corporation, the experienced and skilled attorneys at VanHorn Law Group are here to help. Our offices in Fort Lauderdale and West Palm Beach are open Monday through Saturday, with walk-ins welcome. We will even open up on Sunday if you make an appointment.

Try that with Greenberg Traurig.

We’re here to help you through the tough stuff, and see your bankruptcy successfully discharged. Let’s get started!