As previously reported by RBR+TVBR, Larry Patrick, the pre-petition receiver for the radio stations once licensed to Ed Stolz’s Royce International Broadcasting, had urged the U.S. Bankruptcy Court for Nevada to convert Stolz’s bankruptcy from Chapter 13 to Chapter 7. The Court granted that motion today.
Stolz was notably absent from the proceedings, which will lead to the assignment of a Chapter 7 trustee to manage his personal assets.
Patrick’s push came after Stolz sold a property in Rancho Mirage, California without notifying creditors or obtaining court approval. The emergency motion for Chapter 7 conversion, filed on February 28 by attorneys from Fox Rothschild in Las Vegas, highlighted the lack of transparency in the sale of Stolz’s property at 1 Toscana Way West, which auctioned for $1.3 million.
The court acknowledged Stolz’s attempts to circumvent creditors and misuse the bankruptcy system for personal gain. Notably, the court described Stolz’s actions, including selling property valued at nearly $1.5 million without proper disclosure, as a stark example of misconduct warranting possible criminal investigation under title 18 of the U.S. Code.
On the record, the Court chastized Stolz’s actions, saying, “I can’t think of much more egregious conduct than using the bankruptcy process to avoid satisfaction of judgments, a receivership, failing to sell some assets in a plan [in the related Silver State cases], and then fail to take any action in those cases and this case.”
Patrick holds a judgment claim against Stolz amounting to $2,174,839.35, with a significant portion secured by the Toscana Way property. Given Stolz’s significant debts, Patrick and his legal team argued that converting to Chapter 7 bankruptcy would enable the liquidation of Stolz’s assets to pay off creditors.
Given these developments, it is crucial to consider filing a nondischargeability action before the deadline on May 6, 2024.
The combination of recoveries from both the Silver State and Stolz bankruptcy estates presents a potential for substantial, possibly full, reimbursement for creditors, as indicated by discussions with the Chapter 11 trustee.
