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Girls Gone Wild!

picasso woman-sitting-in-red-armchair-1939Now that I’ve got your attention … Back in the days when I spent a lot of time in bankruptcy court*, the most titillating cases – and there were very few – usually involved pop stars who’d made bad business deals and outspent their royalty income (like the band TLC). That was then, this is now. There’s a juicy case pending in the Central District of California involving Girls Gone Wild, the once-thriving, now-dying (at the hands of the bankruptcy trustee, according to bad boy founder of GGW, Joe Francis) raunchy entertainment brand that features topless drunken co-eds. Now Francis, who has been outspoken in his contempt for the court and the process, finds himself again in Bankruptcy Judge Sandra Klein’s sights.

Joe Francis has written the book on what not to do to stay in the court’s good graces. It culminated this past May when Francis flouted Judge Klein’s preliminary injunction that he not communicate with GGW employees and to stay at least 100 feet away from the company’s L.A. offices. According to documents filed in the case, he showed up May 9, with his girlfriend, at the GGW offices, shouting profanities and generally being mean. He showed up and did it again a week later. The bankruptcy trustee then filed a contempt motion against Francis, asserting the injunction violations, as well as issues of hindering removal of bankruptcy estate property and the failure to turn over to the trustee some pretty snazzy company cars that Francis says are irretrievably in Mexico. What’s a judge to do?

Judge Klein wants Francis arrested and to spend a bit of jail time to reflect upon his choices. But does she have that power? Mister Francis says she doesn’t. In fact, most of the Circuit Courts of Appeal agree that the bankruptcy court has only civil contempt powers, and that the court must rely upon the district court to enforce any criminal contempt powers. Judge Klein writes, “In light of the uncertainty regarding this Court’s authority to issue an arrest warrant as a civil coercive sanction, the Court is left with no alternative but to refer this matter to the District Court for further proceedings.” Whether the District Court enforces Judge Klein’s recommendation remains to be seen.

* I had the privilege to serve as judicial law clerk to a U.S. bankruptcy judge early in my career, and then spent much of my career representing banks and other lenders in the bankruptcy process. Here’s an article I wrote for Esquire magazine describing my epiphany and transition away from that practice.

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