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Girardi Is ‘Incompetent,’ His Brother Tells Bankruptcy Court (1)

Jan. 14, 2021, 12:54 PMUpdated: Jan. 15, 2021, 1:21 AM

Thomas Girardi’s brother, Robert Girardi, asked a federal judge on Wednesday to appoint him guardian ad litem for purposes of bankruptcy proceedings in federal court, claiming that the famed plaintiffs’ attorney currently lacks the cognitive capability to handle his legal and financial troubles.

Unsecured creditors who filed a Chapter 7 involuntary bankruptcy petition against law firm Girardi Keese were granted default relief Wednesday, after the U.S. Bankruptcy Court for the Central District of California said it received no response from Girardi, “timely or at all.”

The guardian ad litem request, which was accompanied by a motion for additional time to respond to the petition, was filed by Robert right before Judge Barry Russell entered his order.

Russell denied the request for an extension, but he set a hearing date of Feb. 16 to consider the request for appointment as guardian ad litem, according to an order Thursday.

The motion says that “TG is incompetent” and “unable to act on behalf of the Debtor or for himself.”

In a declaration attached to the motion, Robert states that Thomas is “incapable of realizing and understanding the repercussions of the bankruptcy filings pending against him and his law firm,” even though various people have explained it to him “over and over.”

According to the declaration, Thomas is suffering from short-term memory loss and “cannot have a reasoned conversation about the multiple legal and financial issues he is facing.”

Those legal issues might include a criminal investigation, after Judge Thomas M. Durkin of the Northern District of Illinois referred the firm’s alleged embezzlement of at least $2 million in client funds to the local U.S. Attorney’s Office in December.

The possibility that Thomas Girardi may need to undergo a competency evaluation was raised by an attorney appearing for him during those hearings. His counsel indicated that she had been unable to effectively communicate with him about her representation.

The $2 million was paid to Girardi Keese by Boeing in connection with settlements resolving claims brought by family members of passengers killed on Lion Air flight 610. At the contempt hearing that led to the referral, the firm admitted that it hadn’t paid the full settlement amounts for four clients and couldn’t afford to do so.

The court subsequently learned of a fifth Girardi Keese Lion Air client who received none of the settlement money he’s owed, according to a lawyer representing the plaintiffs in their efforts to recover the settlement funds.

Although Durkin froze Girardi’s and the firm’s assets when he found both in contempt of court orders in December, he lifted the freeze when Russell authorized the appointment of an interim trustee to preserve the debtors’ assets earlier this month.

According to the petitioning creditors, who are collectively seeking millions of dollars in unpaid debts, the failure to immediately appoint an interim trustee could have jeopardized further the debtor’s most valuable assets—namely, uncollected and expected legal fees owed to the now non-operational firm for both resolved and ongoing client matters.

The case is In re Girardi Keese, Bankr. C.D. Cal., No. 2:20-bk-2102, docket 1/13/21.

(Updates at third and fourth paragraphs to indicate date of hearing and denial of request for extension of time.)

To contact the reporter on this story: Holly Barker in Washington at hbarker@bloombergindustry.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Carmen Castro-Pagán at ccastro-pagan@bloomberglaw.com

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