SulmeyerKupetz was employed as counsel for the Official Committee of Unsecured Creditors in an individual chapter 11 case captioned, In re Sonya Dakar, which case was commenced on May 12, 2012. Dean Rallis Jr. acted as lead counsel for the Committee. Pre-dating the commencement of the case, the
Debtor was embroiled in a four year, bitter and contentious litigation with her ex-husband. Such litigation included multiple matters, pending in multiple other forums, including Dakar v. Dakar, Los Angeles Superior Court, the marital dissolution matter, Israel Dakar v. Michal Dakar, a fight over community property assets, Michal Dakar, et. al. v. Natan Dakar, et al., Sonya Dakar v. Mindy’s Cosmetics, Mindy’s Cosmetics v. Sonya Dakar, et al., and other state court litigation with various creditors regarding claims, and litigation relating to trademark issues. Furthermore, multiple receivers, three in fact, had already been appointed in state court proceedings, which only added a level of complexity and to the issues that needed to be addressed.
In addition to the specific issues surrounding the Dakar bankruptcy case, Mr. Rallis was also required to become knowledgeable and involved in related chapter 11 cases involving Sonya Dakar International, Inc. and Hazlaha,LLC. Because these cases involved the same parties, many of the same issues, and prior state court orders that provided for the Debtor’s interest in these other related debtors and their assets, Mr. Rallis was required to be actively involved in these related cases and to assert positions for the benefit of the Committee and its constituents.
The contentious history of the parties resulted in a tumultuous and drawn-out chapter 11 bankruptcy case. Given the numerous ongoing disputes and prepetition state court and family court litigation that had been ongoing between the Debtor, her ex-husband and children, and other interested parties, Mr. Rallis was required to become familiar with the significant prepetition events that transpired and evaluate the existing
assets, the status of those assets and the overall nature and status of the case. Because the various factions found it almost impossible to agree on any points, Mr. Rallis assumed the role as an independent and objective party to attempt and resolve certain disputes. Indeed, the Court often tasked Mr. Rallis with drafting of orders, so that a conclusion to a particular dispute could be reached more quickly. Even so, disagreements arose regarding the specific wording of orders, the scope of certain orders, and even who the parties would select as a mediator or examiner.
Later, with the support of the Committee, the Bankruptcy Court appointed an examiner to investigate each of the debtors. In his first and only report, the Examiner stated that in his attempts to collect information regarding the finances of the debtors, he encountered significant resistance. Specifically, the Examiner believed that the debtor had deliberately deleted a significant amount of her financial records, just before his visit to her business location. In his report, the Examiner also recommended the appointment of a chapter 11 trustee.
Subsequent to the Examiner’s report, the various parties continued to engage in settlement discussions, in an attempt to reach a global settlement agreement that would settle all outstanding claims between the two factions, the debtor and her ex-husband. Mr. Rallis again acted as a independent third party to attempt to facilitate an agreement. Despite the Mr. Rallis’ efforts, numerous disagreements arose between the two factions regarding specific terms of the settlement agreement, which required further substantial discussions and negotiations.
Failing to reach an agreement, with the support of the Committee, the Court granted the United States Trustee’s motion to appoint a trustee. Subsequent to the appointment of the Trustee, the parties continued to engage in settlement negotiations to iron out outstanding details, such as those relating to the licensing agreement, resolution of the state court litigation cases, and a claims protocol terms. An agreement was finally reached among the parties.
As a result of the settlement, which was recently approved by the Bankruptcy Court, unsecured creditors are expected to receive payment, in full, of their allowed claims.