"The appointment of a chapter 11 trustee is an extraordinary measure" - and Don't Forget the Susan Ford, Sussman Shank Emails where she says appointing a Trustee is bad for Creditors. Yet Kevin Padrick's Clout, Connections, and Power got him the Trustee Job. Even though he was an "Insider" and seemingly by Law could not legally be the Trustee in the Summit Bankruptcy

"From: Mark Neuman <neumancpa@gmail.com>

To: Stephanie Studebaker-DeYoung <stephanie@studeycpa.com>
Cc: Crystal L. Cox <savvybroker@yahoo.com>;
Sent: Mon, February 22, 2010 2:26:14 PM
Subject: BK rules in appointing trustees

Please check out the attached.  This is a legal document from BK proceedings in The 1031 Tax Group, LLC case.  I've tried to highlight important parts to make it easy.  Under (Section 1104(a) of the Bankruptcy Code the court can appoint a BK trustee in place of to convert a debtor in possession (DIP) BK (which is exactly what the Summit case was) if:

1)  there is fraud, dishonesty, incompetence or gross mismanagement of the affairs by the debtor by the current management (didn't apply to Summit)
2)  such appointment is in the interests of the creditors (this is very arguable)

3)  if grounds exist to convert or dismiss the case (didn't apply to Summit)

It also says  and the it "should be the exception, rather than the rule".  "The decision to appoint a chapter 11 trustee is a factual determination entrusted to the discretion of the bankruptcy judge".

In Sharon Steel Corp "the standard gives the.... court discretion to appoint a trustee when doing so would serve the parties' and estate's interests".  In Ionosphere Clubs, Inc. the standard for appointment of a trustee should be...... "facilitation of a reorganizatoin that will benefit bothe the creditors and the debtors".

Courts have considered several factors including "the benefits derived by the appointment of a trustee, balanced against the cost of appointment".

This also refers to the fact that Ed Okun had proven "unreliable" and that the "level of distrust between the Debtors.... has only increased".

I think that if there was any higher level of distrust, it was only fueled by what Kevin Padrick was telling the creditors behind closed doors (like using the property lists we gave him to convince the creditors that they "found" all these assets).  And what actions did we take that created a level of distrust?  None other than helping!  The fact that we were working hard with Terry?

The fact that we actually got some properties sold?  The fact that we were trying to transfer all of our net worth but the attorneys got in the way and tried to make it impossible?  The fact that attorneys told us we could be prosecuted if we just transferred the assets because it would be a fraudulent transaction?

Steph- was there any mention of the considerations above when Dunn decided he would appoint a trustee?  Any discussion on the factors that have to be present?

To make sure the facts are clear, the Creditors' Committee counsel I believe made a motion to replace Terry as CRO with Kevin Padrick.  When there was resistance to that in court by the attorneys for the debtor, probably because Sussman knew they would get fired if Padrick was hired (Stephanie was at that hearing), the judge decided he would just appoint a trustee because no one could "agree".  Can the judge do that on the spot without any consideration of the law..... not even thinking through if the circumstances for him to do that under the law were present?

Was this pre-planned anyway between Padrick and Judge Dunn if someone objected?  And all of the sudden Sussman throws its support to Kevin- why??  Due to the deal they made to salvage the exchanger work if they supported Padrick?  Better than getting shut out completely?  Not for the best interests of the creditors?

Mark"

Click Here for Attached Document

Summit 1031 Bankruptcy Transparency Documents





More on the Summit Bankruptcy





My Blog on Obsidian Finance Group
http://obsidianfinancesucks.blogspot.com/

Summit Bankruptcy Whistle Blower Blog, NOT Mine
http://www.summit1031bkjustice.com/

Documents I gave the courts to prove the source of the post
http://obsidianfinancesucks.blogspot.com/2011/12/in-obsidian-v-cox-i-provided.html

http://www.docstoc.com/docs/117800653/Obsidian-V-Cox-Trial-Transcripts

Meeting Videos
http://www.youtube.com/user/KevinPadrick

Court Filing Against Tonkon Torp and Obsidian Finance Group
http://www.docstoc.com/docs/98076240/David-Aman-Tonkon-Torp-for-Obsidian-Finance-Group-Trustee-Kevin-Padrick