L.A. Mansion Owner Wants to Pause Bankruptcy During Virus

A California man is asking a bankruptcy court to put his Chapter 11 case on ice for 90 days because the new coronavirus has made his reorganization temporarily impossible.

Gennady Moshkovich’s motion for an order temporarily suspending the case, filed Monday in Los Angeles, relies on Section 305(a) of the bankruptcy code, a rarely used provision that gives a bankruptcy judge authority to dismiss or suspend a case if “the interests of creditors and the debtor would be better served.”

A New Jersey bankruptcy judge March 27 used Section 305(a) of the bankruptcy code to suspend the unrelated case of Modell’s Sporting Goods Inc. Modell’s counsel Cole Schotz P.C. said it was the first time that provision was used to suspend a case because of a global crisis.

Some bankruptcy attorneys, including Robyn Sokol of Brutzkus Gubner in Los Angeles and Mark Lichtenstein, a partner at Crowell & Moring in New York, told Bloomberg Law that greater use of Section 305(a) is likely to follow in the wake of the pandemic and efforts to contain it.

Moshkovich filed Chapter 11 in February in the U.S. Bankruptcy Court for the Central District of California after a lender with a junior lien on his high-end Beverly Hills, Calif., luxury estate declared a default on its loan.

The goal of the reorganization is to market and sell the property at a price sufficient to pay his secured and unsecured creditors in full, according to the motion.

But the coronavirus pandemic brought the sales process screeching to a halt.

Moshkovich asked the court to suspend the case, but to continue the automatic stay prohibiting creditors from pursuing him or his property to collect on debts until the public is permitted to travel and view the estate.

Moshkovich will continue to pay expenses associated with maintaining the property during the suspension, he said.

David B. Golubchik of Levene, Neale, Bender, Yoo & Brill LLP represents Moshkovich.

The case is In re Gennady Moshkovich, Bankr. C.D. Cal., No. 20-11547, Motion for Order Temporarily Suspending Chapter 11 Case 3/30/20.

For additional legal resources, visit Bloomberg Law In Focus: Coronavirus.