3rd Circ. OKs Sanctions in Telecom Exec.’s Bankruptcy

January 26, 2015 – In The News

Samuel H. Israel, William H. Stassen and Yann Geron were featured in the Law360 article, “3rd Circ. OKs Sanctions in Telecom Exec.'s Bankruptcy.” Full text can be found in the January 26, 2015, issue, but a synopsis is below.

The Third Circuit has reinstated sanctions against counsel for the former chief of a defunct telecommunications firm. The sanctions stem from the filing of an adversarial complaint in the executive's 2006 bankruptcy, saying the complaint was filed in bad faith and increased costs of the proceedings.

The decision overturns a ruling by U.S. District Judge Curtis Gomez, who had said that sanctions were not warranted under 28 U.S.C. § 1927 because the adversary complaint and fee objections could not have “multiplied” the adversary proceedings. Before Judge Gomez's decision, the bankruptcy court had awarded the trustee, James Carrol, more than $137,000 for costs associated with defending against the bribery allegations.

The Third Circuit said Judge Gomez's decision viewed the statute authorizing sanctions too narrowly, that the adversarial proceeding were inexorably linked to the bankruptcy, and that it had caused the case to drag on needlessly.

Carrol is represented by Samuel H. Israel, William H. Stassen and Yann Geron, of Fox Rothschild LLP.