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Mansion Owner Ditches Virus-Spurred Bankruptcy Suspension Motion

April 17, 2020, 8:17 PM

The owner of a Beverly Hills, Calif., luxury estate has withdrawn his request to suspend his Chapter 11 bankruptcy case after a Los Angeles bankruptcy judge said she lacks authority to do so.

Gennady Moshkovich Thursday withdrew a motion to put the case on hold in light of the coronavirus pandemic. His reorganization plan hinged on selling his multi-million dollar estate within a short time frame, but shelter-in-place and shutdown orders made marketing the property impossible, he said.

The request relied on a rarely used provision of the bankruptcy code, Section 305(a), which allows courts to “mothball” a bankruptcy case if “the interests of creditors and the debtor would be better served.”

A New Jersey bankruptcy court used that provision March 27 to suspend the Chapter 11 case of Modell’s Sporting Goods Inc. Other bankruptcy filers, particularly those in retail, are likely to seek similar relief, some bankruptcy practitioners predict.

But Judge Sheri Bluebond of the U.S. Bankruptcy Court for the Central District of California said at a hearing earlier in the month that she didn’t agree with the decision in the Modell’s case, Moshkovich’s attorney, David B. Golubchik of Levene, Neale, Bender, Yoo & Brill LLP, told Bloomberg Law Friday.

The judge said an order suspending a case under section 305 can’t at the same time allow the automatic stay prohibiting creditors from pursuing the debtor or his property to remain in effect, Golubchik said.

Bluebond said she was aware of Covid-19’s effects on the economy and real estate transactions, and that she would address future issues with that in mind, he said.

The case is In re Gennady Moshkovich, Bankr. C.D. Cal., No. 20-11547, Dismissal/Withdrawal of Motion 4/16/20.

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

To contact the reporter on this story: Daniel Gill in Washington at dgill@bloomberglaw.com

To contact the editor responsible for this story: Seth Stern at sstern@bloomberglaw.com