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Case 16-50644-btb Doc 29 Entered 09/05/17 08:41:40 Page 1 of 19
UNITED STATES BANKRUPTCY COURT
DISTRICT
OF NEVADA (
Case No. 16-50644-btb
Chapter 15
IN RE:
PATRICK CANET AND JAZI GHOLAMREZA ZANDIAN,
Debtors.
. . . . . . . . . . . . . . .
Tuesday, September 6, 2016 3:20 p.m.
TRANSCRIPT OF APPLICATION VERIFIED PETITION FOR RECOGNITION AND CHAPTER 15 RELIEF FILED BY JEFFREY L. HARTMAN ON BEHALF OF PATRICK CANET[5] BEFORE THE HONORABLE BRUCE T. BEESLEY UNITED STATES BANKRUPTCY COURT JUDGE
APPEARANCES:
For the Debtors:
Hartman & Hartman
By: JEFFREY L. HARTMAN, ESQ.
(775) 324-2800
For Jed Margolin:
Brownstein Hyatt Farber Schreck
By: ARTHUR ZORIO, ESQ.
(775) 324-4100
TELEPHONIC APPEARANCES:
For Jed Margolin:
Brownstein Hyatt Farber Schreck
By: STEVE E. ABELMAN, ESQ.
(303) 223-1100
Audio Operator: Stacie C. Burney, ECR
Transcription Company:
Access Transcripts, LLC
Fishers, IN 46038
(855) 873-2223
www.accesstranscripts.com
Proceedings recorded by electronic sound recording, transcript produced by transcription service.
Case 16-50644-btb Doc 29 Entered 09/05/17 08:41:40 Page 2 of 19
(Proceedings commence at 3:20 p.m.)
THE COURT: This is Patrick Canet or Canet. I apologize for keeping you.
MR. HARTMAN: Yes, Your Honor. Jeff Hartman on behalf for --
on behalf of Mr. Canet, who is the representative in
the foreign main proceeding in
THE COURT: Just one second. Oh, okay.
MR. ZORIO: Good morning, Your Honor. Arthur Zorio on behalf of Jed Margolin, and I believe I have co-counsel on the phone.
THE COURT: Okay.
MR. ABELMAN: (Telephonically) Your Honor, this is Steve Abelman, and I appreciate you accommodating me by allowing me to participate telephonically.
THE COURT: Oh, you're very welcome.
MR. HARTMAN: Your Honor, if I may?
THE COURT: Yes. Please.
MR. HARTMAN: This began with Mr. Canet's Chapter 15 petition for recognition of a foreign proceeding which I filed in May of this year.
THE COURT: And this is the
proceeding that's in
MR. HARTMAN: That's correct. And to jump to today, Mr. Abelman filed an objection to the petition for recognition on behalf of Mr. Margolin. That was docket entry -- excuse me,
Case 16-50644-btb Doc 29 Entered 09/05/17 08:41:40 Page 3 of 19
Docket entry 13 filed on June 16th. On August 3rd, I filed a -- what I called a status report and a reply regarding the French proceeding against Zandian. That's docket entry 18. Mr. Abelman and I agreed to continue the hearing, I believe, twice, and now the matter is set for today. We have not reached any kind of an agreement, so it's at issue for the Court.
THE COURT: Okay.
MR. HARTMAN: So I would like to direct your attention to the status report, which was docket entry 18.
THE COURT: Hang on. Thank you.
(Pause)
THE COURT: All right. And just wait a second. Juanita (phonetic), could you please print docket number 12 for me? Thank you. That's docket 12. Could I have the next one?
THE CLERK: I apologize, Your Honor.
THE COURT: Oh, no problem. I was just confused.
THE CLERK: That is 12. Do you want 15?
THE COURT: Did I say 12? I want 13. I misspoke. I'm sorry. You didn't make a mistake. I did.
THE CLERK: (Indiscernible)
(Court reviews documents)
THE COURT: So you -- there was an attempted bribery of you, sir?
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MR. HARTMAN: Are you talking to -
THE COURT: You, to -
MR. HARTMAN: Mr. Zorio.
THE COURT: Mr. Zorio.
MR. ZORIO: Oh, I'm counsel, Your Honor. That was Mr. Adam McMillen.
THE COURT: Okay.
MR. ZORIO: Yes. At my offices.
THE COURT: I just have never seen an allegation that somebody tried to bribe a lawyer in a case in front of me.
(Court reviews documents)
THE COURT: Okay. I have read these. Go ahead.
MR. HARTMAN: Thank you, Your Honor. I'll limit it to basically what's addressed in my status report and reply, which is that under Section 1516, the Court is entitled to certain presumptions concerning recognition of a foreign proceeding. Do you have it there available?
THE COURT: Title 1516? I do not, I don't think. Oh, the bankruptcy --
MR. HARTMAN: Yeah, Section 1516 of Title 11.
THE COURT: I do have it. I don't get into the 15s very often.
MR. HARTMAN: We -- I understand, Your Honor. This is my second one.
THE COURT: Mine, as well. Okay.
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MR. HARTMAN: Section 1516 is entitled, "Presumptions concerning recognition." The (a) says:
"If the decision or certificate referred to in 1515(b) indicates that the foreign proceeding is a foreign proceeding and that the person or body is a foreign representative, the court is entitled to so presume."
(b) also says:
"The Court is entitled to presume the documents submitted in support of the petition for recognition are authentic, whether or not they have been legalized."
The documents which I attached to the initial petition for recognition and then the one attached as Exhibit A to the reply brief basically are documents issued by the French court. And I have the original certified stamped copy in my files. The copies that were filed with the Court, of course, are not the originals.
But basically, I think that the foreign main proceeding representative, Mr. Canet, has met the threshold requirements of this Court granting the petition for foreign recognition. And as I indicated in my paper that even if the allegations made by Mr. Margolin against Zandian are true, the policies under Section 1501 of the international provisions regarding insolvency statutes should apply, and this Court
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should extend
what almost relates to comity to the proceedings in the foreign court and allow
this Court to take jurisdiction over the assets here in the state of
THE COURT: No. Thank you. Counsel.
MR. ABELMAN: Thank you, Your Honor.
THE COURT: Yeah.
MR. ABELMAN: Let me premise this by saying I'm not questioning the authenticity of any of the materials presented by Mr. Hartman. Rather, we question whether those materials meet the requisite threshold. And as you pointed out earlier, there are many -- there are any number of unique aspects to this case, and there's still many unanswered questions which cause us to feel profoundly uncomfortable with making a decision to recognize the foreign proceeding at this juncture.
Just by way of quick background, Jeff Margolin has
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been
actively pursuing Zandian for almost seven years
since he filed his lawsuit against Zandian in
December of 2009. He was successful in obtaining a judgment against Zandian in June of 2013, so three and a half years later.
Since then, Zandian has engaged in evasive actions,
including, we believe, fraudulent conveyances. So in May of this year Mr. Margolin filed an action to void deeds in, in essence, a
fraudulent conveyance action in the District Court located in
Mr. Hartman did, indeed, supplement the original petition. It would be our position that he -- the information was helpful but it was more in the line of providing an additional tablespoon of content when, really, a full cup was needed. And I'll be more specific. We believe that this supplement was insufficient because the status report and reply, if you have that in front of you, references a certificate -- it has a certificate regarding insolvency proceedings. And again, we're presuming the authenticity of this. And so there's three entries on that certificate.
THE COURT: So hang on for just a second.
MR. ABELMAN: First one is -
THE COURT: Hang on for just one second.
MR. HARTMAN: It would be -
THE COURT: I'm going back to the English language
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one.
MR. ZORIO: It would be docket 18-1, page 204, Your Honor.
THE COURT: Docket 18 -- yeah. Hold on. Exhibit A. Would that be what it is?
MR. ZORIO: Yes.
THE COURT: Okay. So I'm looking at a document whose heading is "The clerk's office of the commercial court" with a street address and a telephone number, "Certificate regarding insolvency proceedings." Is that what we're looking at, Counsel?
MR. ABELMAN: Yes.
THE COURT: Okay. Not the French version.
MR. ABELMAN: And a little bit -- right. And a little bit further down, like halfway in the page, it says, "Concerning Gholamreza Zandian, Jazi."
THE COURT: Correct.
MR. ABELMAN: But it's hard to discern from our vantage point whether this is indeed a -- an insolvency proceeding involving Mr. Zandian. We know that there was an insolvency proceeding involving Computerworld in which Computerworld obtained a judgment against Mr. Zandian for 20,000 francs. So what we can't discern is is there a separate Zandian case, or is this part of the Computerworld case? I mean it would be very helpful to have the docket sheet for the
Case 16-50644-btb Doc 29 Entered 09/05/17 08:41:40 Page 9 of 19
Zandian case. It would be helpful to know what Mr. Canet did to transform the 20,000 franc judgment into a judgment for euros since euros -- I mean since francs were formally removed as French currency in February of 2012. So it's our --
THE COURT: That does strike me as odd.
MR. ABELMAN: -- concern whether -- yeah. I mean how do we know that this is current and still viable? And if you look at 11 U.S.C. Section 1502, it says a debtor means an entity that is the subject of a foreign proceeding. And so we're still confused as to whether there's a separate insolvency proceeding pending against Zandian, or if it's part and parcel and with the Computerworld.
THE COURT: Well, let me ask you this, though.
MR. ABELMAN: Okay.
THE COURT: Aren't -- am I not required to presume under 1516 that this document is what it purports to be?
MR. ABELMAN: Yes. But what does it -- the question I have is what does it purport to be? It's a certificate saying these pleadings are -- have been filed. So I'm not sure what these pleadings reflect.
THE COURT: Well, it's a certificate regarding insolvency proceeding. Regarding a receivership for the liquidation of assets in '67, which was a long time, a judicial reorganization, which was some time ago, but then a protection judicial reorganization and liquidation that is in '05
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concerning Mr. Zandian, who has an address. I don't know what produced the following results on -- a search of the corporate registry produced the following results, a judgment dated 1998. And according to the way you read this, this judgment concerns Mr. Zandian. Judgment in 2015, the way this reads also concerning Mr. Zandian. The appointment of a new bankruptcy judge to replace the previous judge in February of last year.And then it says it's subject to any other bankruptcy courts.
MR. HARTMAN: Your Honor, I hate to interrupt Mr. Abelman, but I think I can help on -
THE COURT: Explain this to all of us?
MR. HARTMAN: I think I can help on this particular issue.
THE COURT: Okay.
MR. HARTMAN: If you, again, go to my reply and look at page 2, paragraph 7.
THE COURT: Hang on.
MR. HARTMAN: I hate to -
THE COURT: No. That's okay.
MR. HARTMAN: -- refer you to all these things but -
THE COURT: Paragraph 2, page 7?
MR. HARTMAN: No. Page 2, paragraph 7.
THE COURT: "As a result of the commercial court of" -
MR. HARTMAN: Right. Now that references Docket
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entry 1, which was my original petition attached to which was the April 1998 document referenced in what you've just read from.
THE COURT: Okay.
MR. HARTMAN: So at docket entry 1, page 9 of 12 -and I can hand it up if it's easier.
THE COURT: Okay, please. That would be better. You have a copy for counsel?
MR. HARTMAN: Not here with me.
THE COURT: We can -- we'll make him one.
MR. HARTMAN: Okay. It's docket 1, page 9 of 12.
THE CLERK: Thank you.
(Pause)
MR. HARTMAN: May I approach, Your Honor?
THE COURT: Yeah, please. And can you give me your -- the copy you have for me now?
MR. HARTMAN: Sure.
THE COURT: Thank you. Appreciate it. Is this my copy? Thank you. You get it, sir?
MR. HARTMAN: It's my copy, but it's your copy now.
THE COURT: Oh, our copy. It's a handsome picture of Mr. Canet 20 years ago.
MR. HARTMAN: On one other page, right?
THE COURT: Oh.
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MR. HARTMAN: I'm talking about 9 of 12.
THE COURT: Oh, I'm sorry. This was 5 of 12. Oh, I'm sorry.
MR. HARTMAN: So, Your Honor, that document of which 9 of 12 is a part is the April 1998 document that's referenced in the certificate regarding insolvency proceedings. And you can see at the -- begins at the top of page 9 that essentially it says, "It is ordered that a liquidation proceeding is commenced against Mr. Zandian."
MR. ABELMAN: So, Your Honor, if I may?
THE COURT: Yes.
MR. HARTMAN: And I appreciate Mr. Hartman's help on this. I'm happy to utilize what's most expeditious and we can dispense with all formality. So I have no problem with Mr. Hartman pointing that out. If you go back one page to the pleading cover sheet where it says, "Judgment of 3 April 1998, bankruptcy proceedings number" -- and I'm sorry. Are you there?
THE COURT: What are we looking at exactly?
MR. ABELMAN: Well, it -
THE COURT: We're looking at -- I think it's two pages back, "Judgment of April 3, 1998, Sixth Chamber"?
MR. ABELMAN: Yes.
THE COURT: Okay.
MR. ABELMAN: Yes. So it says, "Bankruptcy
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proceedings number 989252, Canet, Judicial Liquidator of Computerworld v. Mr. Gholamreza Zandian, Jazi." So my point is I -- these materials don't reflect whether this is a independent insolvency action of -- relating to Mr. Zandian or this is just what would be akin to an adversary proceeding brought by Mr. Canet as the judicial liquidator of Computerworld. And if it's -- if it's the latter, then I would submit that it doesn't meet the threshold for a Chapter 15, and it's just another party seeking to sue or collect from Mr. Zandian as opposed to an independent insolvency action of where Mr. Zandian is the debtor.
MR. HARTMAN: Well, Your Honor, I guess -
MR. ABELMAN: And --
MR. HARTMAN: -- it comes down to --
MR. ABELMAN: If I -- if I may finish because -
THE COURT: Go ahead.
MR. ABELMAN: -- I -- there's a
couple points that I want to tie together and then Mr. Hartman can proceed. And
that's why, you know, a docket sheet from this case, which is 18 years old,
would be informative. I also want to shift to the public policy aspect. 11
U.S.C. Section 1506 says: "Nothing in this chapter prevents the Court from
refusing to take an action governed by this chapter if the action would be
manifestly contrary to public policy of the
Case 16-50644-btb Doc 29 Entered 09/05/17 08:41:40 Page 14 of 19
And this is where the
underlying basis of this action in
THE COURT: Okay.
MR. ABELMAN: Apparently, under
French law, there were sufficient grounds by which, as an owner of
Computerworld, Zandian would be held liable for the
debts of Computerworld. So the underlying judgment that Mr. Canet
obtained was for up to 20,000 francs. Now what's most curious is that the
19,000 of the 20,000 francs are a claim from what is referred to as Bank Mellat. And Bank Mellat is an
Iranian-owned bank. And what transpired was -- in the
So it appears that Bank Mellat, the Iranian-owned bank, was financing the sale of
those computers, and so 95 percent of the indebtedness owed by Computerworld
appears to be owed to Bank Mellat. And we think that
it would be contrary to
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the
proceeds from assets in
THE COURT: Well, I was told
there are no proceeds of assets or assets in
MR. HARTMAN: No. There is
property owned -- well, there was property owned in
THE COURT: Well, let me ask you this. I mean, you've told me lots of interesting stuff, but none of it's evidence. You're just telling stuff. I've not seen declarations, or I'm not even sure you could testify to most of those things because it's kind of interesting historical background. But my inclination is, since I'm required to give weight to documents which purport to be foreign documents, foreign judicial documents, I -- I'm inclined to go ahead and recognize the cross-border insolvency which will result the appointment of a Chapter 7 trustee in the near term, which would prevent, then, this individual from -- it would -- I'm sorry -- cloud the title to the real property he has, which would make it much more difficult to -- for him to get rid of.
Your client could, at some point, move for stay relief while the property was impacted by the bankruptcy court and could go forward, but you'd have to make an evidentiary showing that he was entitled to that property or had a -- or
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had a judgment and that there were no other creditors. So I understand what you're telling me, but I don't have any proof of that. And I'm not questioning your verity or your lack of knowledge, I just don't have it in a form that's admissible in court. So I'm going to recognize the insolvency proceeding, and Mr. Hartman can go forward and get a Chapter 7 filed and get a trustee appointed.
It is without -- my recognizing this is without prejudice to a further motion by your client to get rid of it if we can -- if you can establish that, in fact, there is no French proceeding. I know that there is an inconsistency in that francs are referenced as opposed to euros. I don't know why that might be. I just don't know enough French law how they would do that, but -- I don't know any French law, actually, on how they would do that. But maybe that's explainable, maybe not.
But the fact that there is a
currency that would have been the currency involved at the time of the action
is -- that is referenced in a pleading that is post-recognition of the franc
and the euro would be ordinary, maybe there's some requirement or some practice
that in
So I'm granting Mr. Hartman's motions. I am -- I'm
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not discounting your client's position. I don't think your client is significantly injured at this point by recognizing the cross-border insolvency, but I think he can certainly make a showing and try and get stay relief if that's appropriate.
So questions?
MR. HARTMAN: No, Your Honor. I'll --
MR. ABELMAN: I --
THE COURT: Yes, sir.
MR. ABELMAN: Your Honor, I just want to correct a misstatement that I believe I made. I said the judgment was for 20,000 francs. It was actually for 20 million francs.
THE COURT: Oh, okay. Well, that's -- I think that's a lot more.
MR. ABELMAN: Not that that changes your result.
THE COURT: No.
MR. ABELMAN: I just wanted to correct the record.
THE COURT: No. I -- well, something -- I think something said 20,000 francs because I had that same impression from reading through these documents. But anyway, it's a significant chunk of money. But I think you need more evidence in order to get stay relief, and I would prefer to have more evidence from the French court that is more understandable, if that's possible.
MR. HARTMAN: I understand, Your Honor.
THE COURT: But -
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MR. HARTMAN: I'll prepare an order and submit it to Mr. Abelman.
THE COURT: Okay. Counsel is that okay?
MR. ZORIO: Very good. Thank you, Your Honor.
THE COURT: Okay. Thank you very much.
MR. HARTMAN: Thank you, Your Honor.
(Proceedings concluded at 4 p.m.)
* * * * *
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C E R T I F I C A T I O N
I, Sara Winkeljohn, court-approved transcriber, hereby certify that the foregoing is a correct transcript from the official electronic sound recording of the proceedings in the above-entitled matter.
/s/ Sara Winkeljohn
SARA WINKELJOHN, AAERT NO. 808 DATE: August 29, 2017
ACCESS TRANSCRIPTS, LLC
C E R T I F I C A T I O N
I, Lisa Luciano, court-approved transcriber, hereby certify that the foregoing is a correct transcript from the official electronic sound recording of the proceedings in the above-entitled matter.
___________________________
LISA LUCIANO, AAERT NO. 327 DATE: September 5, 2017
ACCESS TRANSCRIPTS, LLC
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