Bankruptcy Court Denies Conversion: Big Win for Creditors in Jack Johnson’s Chapter 11 Case

Attorney Christian Donovan helped secure a victory for creditors in the Chapter 11 bankruptcy case of Columbus Blue Jackets hockey player Jack Johnson. Judge Hoffman of the Southern District of Ohio Bankruptcy Court issued a decision on February 26, 2016, denying Jack Johnson’s Motion to Convert from Chapter 11 to Chapter 7. Jack Johnson filed for Chapter 11 Bankruptcy on the proposition that he had a great deal of lawsuits and garnishments filed against him, such that it threatened his liquidity. As such, he wanted to bring all of his creditors to the table to negotiate a resolution. While this was a proper purpose for filing the Chapter 11, Judge Hoffman rightfully found that after filing for bankruptcy, Mr. Johnson quickly went astray from that purpose.

Attorney Donovan played a pivotal role in demonstrating to the Court that before filing to convert to Chapter 7, Mr. Johnson did not seek to engage in any meaningful settlement discussions with his creditors, and that Mr. Johnson had predetermined to seek conversion if any creditor objected to his initial take-it or leave-it offer. The Court also found that Mr. Johnson failed to satisfy his fiduciary duties as a debtor-in-possession by failing to sufficiently reduce his personal spending in order to preserve the most significant asset of his case–his post-petition income. Overall, the Court found that he engaged in bad faith, and as such he was not entitled to conversion to Chapter 7. This is an important win for the creditors in this case; the firm of Luper Neidenthal & Logan played an important role in that victory. An article with comments from Attorney Donovan was written by Aaron Portzline of the Columbus Dispatch and can be viewed for additional information and insight on this case at Jack Johnson’s Bid to Convert Bankruptcy Denied.

Comments are closed.