Bloomberg reported that the U.S. Justice Department’s bankruptcy watchdog, the U.S. Trustee, recently said that the Chapter 11 filing of a radio host’s three companies “raises numerous questions — the answers to which may demonstrate these cases are an abuse of the bankruptcy system” and that the U.S. Trustee urged a federal judge in Texas to reject a request to appoint former judges to oversee a proposed victim-compensation fund.
The publication turned to finance and restructuring partner Patrick Jackson for insight on how the bankruptcy filing impacts defamation lawsuits that have been brought against the radio host.
The bankruptcy filing could hurt efforts by those suing to collect, explained Jackson. The three companies may try to force them into negotiating in bankruptcy instead of allowing them to fight for a higher payout in court, he noted.
“If I’m a plaintiff, I don’t trust any of this,” said Jackson. “There is a good argument here that these companies don’t have any business in bankruptcy.”