This information may or may not be the latest case information. Please consult an attorney of your own choosing for legal advice. Do not contact the Court, the Chapter 7 Trustee, the Company, or the Company's attorneys for legal advice or status updates.
On June 25, 2009, the Court signed an order converting the case to Chapter 7. The Court also appointed Robert Newhouse as Chapter 7 Trustee. As Trustee, Mr. Newhouse has taken possession and control of all assets of the Company that are property of the bankruptcy estate.
Mr. Newhouse is represented by the law firm Quilling, Selander, Cummiskey & Lownds, P.C. in Dallas, Texas. Please do not contact Mr. Newhouse or his attorneys for information as they will not be able to provide you legal advice at this point.
Also on 6/25/09, the Court scheduled the Meeting of Creditors in the case for July 29,2009 at 2:30 p.m. at the federal courthouse, 1100 Commerce Street, Room 524, Dallas, Texas.
Notice of the Meeting of Creditors has been mailed to the major creditors in the case, but no notice has yet been mailed to consumers who have claims against the company or have money on deposit with the company. Since there are so many consumers involved, the Court has set a hearing on July 29, 2009 to discuss what notice may need to be provided to consumers.
On July 6, 2009, the Company filed its bankruptcy Schedules and Statement of Financial Affairs. Copies are available here:
UPDATE 8-3-09: On July 29, 2009, the Court held a status conference to discuss the current status of the case. The Texas Attorney General, Counsel for the Company, the Chapter 7 Trustee, Counsel for the Chapter 7 Trustee, and the U.S. Trustee, as well as one creditor, were all represented at the conference, which lasted approximately 45 minutes. The Chapter 7 Trustee, the U.S. Trustee, and the Attorney General are discussing, with the cooperation of the company, the best way to handle claims of consumers and other creditors involving the case. So far, the parties have not reached any resolution, but will continue to work toward that resolution. The Court has not yet been asked to decide what to do about notice to consumers.
The Court noted that some individual consumers are filing proofs of claim with the court and that some of those proofs of claim contain confidential personal information. Therefore, the Court decided to seal from public inspection all proofs of claim filed in the case.
Also on July 29, 2009, the Debtor's meeting of creditors under Section 341 of the Bankruptcy Code commenced. The company's representatives testified at the meeting and a few questions were asked of them by the Chapter 7 Trustee's counsel. Because, in part, the questions about how to handle the property fo the estate and what notice to give to consumers are still undecided, the Chapter 7 Trustee decided to adjourn the meeting and re-convene it on August 26, 2009 at 1:00 p.m. (See below for further meeting updates,)
Update 8-19-09: Texas Attorney General Action
On August 18, 2009, the Texas Attorney General filed a lawsuit against Debt Relief USA, Inc. in Travis County District Court in Austin, Texas. The lawsuit generally alleges that Debt Relief USA, Inc. violated Texas law by entering into debt settlement contracts without a proper license and that Debt Relief USA, Inc. engaged in false, misleading and deceptive acts and practices in violation of the Texas Deceptive Trade Practices Act. A copy of the lawsuit may be downloaded here.
The Chapter 7 Trustee re-convened the meeting of creditors on August 26, 2009 and, without taking any additional testimony, continued the meeting again to September 30, 2009 at 1:00 p.m. because the notice issues are still not resolved. (See below for further updates.)
The Chapter 7 Trustee and the Texas Attorney General are working to resolve certain issues in the case. No significant pleadings have been filed in the case since the last update.
Update 9-10-09
The Texas Attorney General has created a list of Frequently Asked Questions about the Debt Relief USA bankruptcy. Those questions and answers are now posted on this website. TX Atty Gen FAQs
Update 9-16-2009
The Texas Attorney General sent a letter to all consumer clients of Debt Relief USA. A copy of the letter is available here:
The Trustee has filed a motion to limit the number of mailings that are sent out on this case. Instead, this website would become one of the sources where consumers and other creditors may obtain certain information about the case. A hearing on this motion has been set for October 1, 2009 at 9:30 a.m. in the courtroom of the Honorable Stacey G. Jernigan, United States Bankruptcy Court, 1100 Commerce Street, 14th Floor, Dallas, Texas 75242.
A copy of the Motion to Limit Notice may be downloaded here:
The Meeting of Creditors has been re-set to October 8, 2009 at 1:00 p.m.
Update 10-8-09
The Meeting of Creditors took place on October 8, 2009. Under applicable bankruptcy law, this meeting was NOT attended by the Bankruptcy Judge. The meeting of creditors was presided over by the Chapter 7 Trustee, Mr. Newhouse, who placed representatives of the Debtor company, Debt Relief U.S.A. Inc., under oath and questioned them about the case. Counsel for the Trustee, Assistant Texas Attorneys General from both the Bankruptcy & Collection Division and the Consumer Protection and Public Health Division also attended and interrogated the witnesses. A transcript of the meeting is being prepared and will be posted once it is completed (anticipated within 10 days). The Chapter 7 Trustee's accountants have been busy analyzing Debtor's books and business records.
Update 1-28-2010
The Court has approved various orders regarding claims to be filed in the case, notice to be given, and other matters. The orders are available for download here:
As always, interested parties should seek their own legal advice. Neither the Court, the Trustee, nor the company's attorneys can give you legal advice.
