Bankruptcy Law News

Michael Avenatti’s Law Firm Files Second Contested Bankruptcy

March 8, 2019, 9:58 PM

The former law firm of celebrity attorney Michael Avenatti, who represented porn star Stormy Daniels in her suit against Donald Trump, filed for bankruptcy late March 7 on the eve of legal proceedings against Avenatti.

Avenatti was trying to get out of appearing the next morning, and he didn’t have authority to put the firm in bankruptcy, creditor Jason Frank Law PLC said in a March 8 emergency motion to dismiss the bankruptcy case. Another federal judge previously ordered the firm into receivership, giving the receiver the “sole authority” to file a bankruptcy petition for the firm, Frank said.

The Trial Group LLP, formerly known as Eagan Avenatti LLP, sought protection under Chapter 11 and listed debts of between $10 million and $50 million and assets in the same range.

Avenatti, who lists his current firm as Avenatti & Associates APC on LinkedIn.com, filed the March 7 petition to avoid appearing on March 8 for an examination in front of a judge for the purpose of locating assets to satisfy Frank’s judgment, Frank said.

Avenatti told the Los Angeles Times that the filing was for his “old firm that we have not operated under for a very long time. We want to ensure the proper distribution of assets to creditors—it means nothing to our current law practice.”

$10 Million Judgment

The petition doesn’t list Jason Frank as one of the firm’s 20 largest unsecured creditors. Frank, a former partner at Eagan Avenatti, has a $10 million judgment against the firm, according to a signed stipulation filed in the earlier receivership action.

A Feb. 13 court order by U.S. Magistrate Judge Karen E. Scott of the Central District of California says that only the receiver shall “have the sole authority regarding whether to file a petition for bankruptcy.” The receiver didn’t approve the filing, Frank said.

A creditor of Eagan Avenatti forced the firm into bankruptcy in Florida in March 2017, and the Florida court transferred the case to Santa Ana, Calif. The California court dismissed the case a year later without a reorganization plan ever being filed.

The Santa Ana bankruptcy court hasn’t yet set a date to hear Frank’s emergency motion to dismiss.

Michael Avenatti filed the bankruptcy petition as counsel for The Trial Group. Frank Sims & Stolper LLP, Jason Frank’s current firm, represents Jason Frank Law.

The case is In re: The Trial Group, LLP, Bankr. C.D. Cal., 19-10822, Voluntary Petition 3/7/19.

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

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