Point Center Files Bankruptcy

It seems that a number of investors are not aware that Point Center filed for bankruptcy on Tuesday, February 18 as counsel in the Charton v Point Center Superior Court civil trial began to argue motions.

Plaintiffs' Motions in response to the bankruptcy have already been filed in federal court to lift the automatic 'Stay' and allow the Orange County Superior Court trial can proceed. Everyone is now waiting for the bankruptcy court's ruling.

The U.S. Bankruptcy Court case was filed in the Central District Of California (Santa Ana) as Bankruptcy Petition #: 8:13-bk-11495-TA. A full mirror of the docket, filings, and rulings can be found  and will be maintained at this link here.

Counsel in the civil case were hoping for a quick ruling in time for Superior Court Judge Perk to proceed with the on March 4. Instead the Bankruptcy Court Judge Theodor Albert required the full waiting period to allow motions. A ruling on the Stay is expected on March 19, 2013. That outcome will dictate what will occur when counsel for both sides meet with Judge Perk in the Superior Court civil case on the March 21.

We understand that the clock counting down to the five year statute of limitations on the Charton trial will be stopped as long as the bankruptcy is active. So the Harkeys' tactic only serves to delay the inevitable.

Point Center's counsel (Jeffrey Benice) stated to the court that the Bankruptcy was filed to fend off the appointment of a receiver from another trial (Mi Arbolito) that is going to cost Point Center $2.8 million dollars. On February 18, the online OCWeekly blogged the following:

"Her husband's Point Center Financial is making a difference by seeking bankruptcy protection not because of the Orange County fraud case, but to stop a separate lawsuit in San Diego County by a builder owed millions from a court judgment against Harkey's company. The defense claims the builder was going after investor funds and had to file for bankruptcy as a strategy to stop that."

But Point Center waited until the day of the Charton trial to file, and then not until after counsel had started pleading motions. Coincidence? The fact that Point Center listed investors in their top 20 creditors list not only contradicts Mr. Benice's statement but seems disingenuous. So much for Dan Harkey's "absolute obligation" to repay investors their money.

Nevertheless, Counsel's admission to the court that it was not about the pending civil trial is one of the core arguments presented to the bankruptcy court in support of grant a stay.

One investor asked if counsel could argue fraud to stay the bankruptcy. This is one of the underlaying premises of the Charton lawsuit. However, fraud has to be proven before it can be used as an argument in bankruptcy court. It's a chicken/egg situation. But there are other compelling arguments that were made to the bankruptcy court judge to support the plaintiffs' motion that the federal bankruptcy court can consider in contemplating its ruling.

..Legion