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Stephen R. Cochell

The Cochell Law Firm, P.C.

7026 Old Katy Road, Ste. 259

Houston, Texas 77096

Telephone: (713)980-8796

Facsimile: (214) 980-1179

srcochell@cochellfirm.com

ATTORNEY FOR JEFFREY BARON

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

IN RE:

JEFFREY BARON,

DEBTOR.

________________________________

JEFFREY BARON,

Movant,

vs.

GERRIT PRONSKE, et al.,

Respondents.

§ Bankruptcy Case No. 12-37921

MOTION FOR EMERGENCY HEARING ON MOTION TO STAY

ORDER FOR RELIEF IN INVOLUNTARY CASE PENDING APPEAL

AND APPOINTMENT OF INTERIM TRUSTEE

COMES NOW Jeffrey Baron (“Baron”) and files this Motion for an Emergency Hearing

(the “Emergency Hearing Motion”) on the Motion to Stay (the “Stay Motion”) the Order for

Relief in Involuntary Case (NDTX Bankr. Case No. 12-37921-sgj7 Dkt (“Bankr. Dkt.”) 240). In

support hereof, Baron would respectfully show as follows:

1. On December 18, 2012 (the “Petition Date”), several parties (“Petitioning

Creditors”) filed an involuntary chapter 7 bankruptcy petition (the “Involuntary Petition”)

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against Baron in this Bankruptcy Court. (Bankr. Dkt. 1.)

2. This involuntary proceeding was filed approximately two hours after the Fifth

Circuit Court of Appeals (the “Fifth Circuit”) entered an order (the “Reversal Order”) on the

same date: (a) reversing an earlier order appointing a receiver (the “Receiver”) over all of Mr.

Baron’s personal assets (the “Receivership Order”), previously entered by the United States

District Court for the Northern District of Texas (the “District Court”) on November 10, 2010, in

a separate lawsuit styled Netsphere, Inc. v. Baron, 703 F.3d 296 (5

Cir 2012) (the “Lawsuit”)

and (b) instructing the District Court to wind down the receivership estate and direct the receiver,

after satisfaction of certain expenses incurred by the receiver, to expeditiously return the property

held and managed by the receiver (the “Receivership Property”) to Baron. See Netsphere, Inc.,

703 F.3d at 313. This never happened. In point of fact, it has been 8 months since the Reversal

Order and the Receiver is still in possession of the Receivership Property, including property that

is exempt from the bankruptcy estate. (See Bankr. Dkt. Nos. 239 and 240.)

3. On June 26, 2013, after an evidentiary hearing where Baron was represented by

an attorney with a limited engagement agreement, the Bankruptcy Court entered the Order for

Relief which effectively terminated Baron’s legal representation when it adjudicated the

involuntary chapter 7 proceeding against Baron as appropriate and subjected Baron to such

proceedings. (See Bankr. Dkt. Nos. 239, 240, 241 and 243.)

4. The Receiver is now seeking direction from the Bankruptcy Court to turn over all

the property in his possession to a chapter 7 trustee (the “Trustee”), despite the Fifth Circuit’s

clear direction to turn over property to Baron. The Receiver is even seeking direction from the

Bankruptcy Court, without ever filing an adversary proceeding, to turn over property that does

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not belong to Baron and therefore never entered into the bankruptcy estate. All of these efforts

are transparent and aimed solely at contravening the Reversal Order and making sure that Baron

has absolutely no funds in which to hire counsel to represent him in any proceeding, including

this involuntary case, the Lawsuit and the appeal of the Order for Relief, as discussed below.

5. On July 8, 2013, Baron filed a Notice of Appeal, commencing the appeal of the

Order of Relief, pursuant to 28 U.S.C. § 158(a). (Bankr. Dkt. 253.) Baron currently has two other

requests for interlocutory appeals pending before the District Court for Northern District of

Texas regarding the Bankruptcy Court’s prior orders ruling that (a) the Petitioning Creditors—

nonjudgment creditors—had standing to initiate the involuntary bankruptcy, and (b) the

bankruptcy court had jurisdiction to adjudicate the involuntary case. (Bankr. Dkt. Nos. 111, Case

No. 3:13-cv-01745, and Docket 112, Case No. 3:13-cv-01746.) Baron expects to

consolidate all of the appeals in the District Court.

6. On July 14, 2013, Baron filed the Stay Motion, seeking a stay of the Order of

Relief. (Bankr. Dkt. 287.) In the Stay Motion, Baron informed the Court that, ever since the

commencement of this involuntary case (Petition Date), he has not been able to hire competent

bankruptcy counsel to adequately represent him because his money and assets are in the

possession of the Receiver and the least expensive quote he received was $250,000 for

bankruptcy counsel. Id. The Stay Motion reveals that Baron will be substantially prejudiced if he

is forced to proceed with the involuntary proceeding, including the appeal of the Order of Relief,

without competent counsel. There are serious due process concerns, because Baron has been

stripped of his property without due process of law, and the bankruptcy Court appears positioned

to disallow Baron to access his property to hire an attorney while it approves attorney fees to his

adversaries in violation of his equal protection rights. Indeed, the Petitioning Creditors have

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turned due process on its head by (a) using Baron’s assets to prosecute unliquidated claims in the

Lawsuit and in this involuntary case against him and (b) leaving Baron without means to

adequately defend himself.

7. On July 15, 2013, one of the Petitioning Creditors, without any authority from

Baron and after Baron requested the Bankruptcy Court allow him funds to hire a bankruptcy

attorney (Bankr. Dkt. 288), filed what appeared to be bankruptcy schedules and statement of

financial affairs for Baron, purporting to adequately represent Baron’s property interests. (Bankr.

Dkt. 289.) Whatever these schedules or statements reflect, they were not authorized, prepared or

signed by Baron.

8. On July 15, 2013, in front of the Receiver, the Trustee, the Petitioning Creditors

and a crowd full of other attorneys that are seeking to strip Baron of every last penny to his name

(including his 401k), Baron appeared without any counsel at a status hearing before the

Bankruptcy Court. He told the Bankruptcy Court that he has been unable to find bankruptcy

counsel because most counsel would require a substantial retainer in a complicated case such as

the instant case. Baron also informed the Bankruptcy Court that, because of lack of counsel,

accountants and other professionals (which he cannot hire) and because the Receiver is in

possession of his records, he was unable to complete the 7 day deadlines under the Order for

Relief, including filing bankruptcy schedules and statement of financial affairs, which could

easily (a) prejudice Baron’s property rights and (b) subject Baron to criminal sanctions, if

improperly prepared. (See, e.g., Bankr. Dkt. 288.)

9. Interestingly and likely because of the fact that she had not had a full opportunity

to consider the arguments in the Stay Motion, at the July 15, 2013 status conference, the

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Bankruptcy Court told Baron, on the record, that he did not need counsel to represent him in this

involuntary case because it was a civil matter and there are plenty of chapter 7 cases where no

counsel is present. The Bankruptcy Court further stated that she planned to proceed “full steam

ahead” with the involuntary case, including the adjudication of property interests and any related

title 18 criminal proceedings, whether or not Baron was represented.

10. As previously mentioned in the Stay Motion, the right to hire competent

professionals has been a great necessity, as demonstrated by the fact that the appointed

receiver—which the Fifth Circuit Court of Appeals determined was wrongfully appointed—and

his professionals have accrued approximately $5.2 million in counsel fees during the

receivership while paying alleged creditors nothing. Moreover, the strategy employed by the

Petitioning Creditors—nonjudgment creditors—to freeze all of Baron’s assets and use it against

him in civil and potentially criminal proceedings, directly flies in the face of the letter and spirit

of the Fifth Circuit’s determination in the Reversal Order.

29. Each day that Baron remains in bankruptcy is a day that Baron’s Fifth and

Fourteenth amendment rights to liberty and property are being violated. Before the Order

of Relief becomes effective, a higher court should evaluate whether the Petitioning Creditors’

strategy in the Lawsuit and this involuntary case, and other orders entered by this Court,

effectively deprive Baron of his constitutional due process rights. Accordingly, in accordance

with the Local Rules for the Bankruptcy Court for the Northern District of Texas, Baron requests

an emergency hearing on the Stay Motion within 7 days of filing this Emergency Hearing

Motion. Any notice of the hearing will be given instantly to the US Trustee, the Receiver, the

Trustee, the Petitioning Creditors, and any other party in interest.

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WHEREFORE, PREMISES CONSIDERED, Baron requests an emergency hearing on

the Stay Motion within 7 days and any further relief to which he may be entitled to under the law

and equity.

Dated: July 19, 2013 Very respectfully,

The Cochell Law Firm, P.C.

By: /s/ Stephen R. Cochell

Stephen R. Cochell

Texas Bar No. 24044255

7026 Old Katy Rd., Ste 259

Houston, Texas 77096

(713)980-8796 (phone)

(713)980-1179 (facsimile)

srcochell@cochellfirm.com

CERTIFICATE OF SERVICE

On this date, I electronically submitted the foregoing document with the Bankruptcy

Clerk for the U.S. District Court, Northern District of Texas, using the electronic case filing

system of the court. I hereby certify that I have served all parties who receive notification

through the electronic filing system.

/s/ Stephen R. Cochell

Stephen R. Cochell

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Stephen R. Cochell

The Cochell Law Firm, P.C.

7026 Old Katy Road, Ste. 259

Houston, Texas 77024

Telephone: (713)980-8796

Facsimile: (214) 980-1179

srcochell@gmail

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

IN RE:

JEFFREY BARON,

DEBTOR.

________________________________

JEFFREY BARON,

Movant,

vs.

GERRIT PRONSKE, et al.,

Respondents.

§ Bankruptcy Case No. 12-37921

AMENDED EMERGENCY MOTION TO STAY

ORDER FOR RELIEF IN INVOLUNTARY CASE PENDING APPEAL

AND APPOINTMENT OF INTERIM TRUSTEE

COMES NOW Jeffrey Baron (“Baron”) and, pursuant to Rule 8005 of the Federal Rules

of Bankruptcy Procedure (the “Bankruptcy Rules”), files this emergency motion (the “Motion”)

to stay the Order for Relief in Involuntary Case (Dkt. No. 240), entered on June 26, 2013 (the

“Order for Relief”) and to stay the appointment of an Interim Trustee.

The Fifth Circuit Court of Appeals issued a ruling on December 18, 2012 that reversed a

District Court’s order placing Baron into a receivership. The Fifth Circuit determined that

Baron’s assets should be “expeditiously released” to him after a wind down period.

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Approximately two hours after entry of the Fifth Circuit Order, however, the same alleged

creditors identified in the reversed receivership filed a petition to place Baron in involuntary

bankruptcy. The receivership assets were never returned to Baron, and they are now subject to

being turned over to the bankruptcy estate and liquidated. In support of this Motion to stay all

actions in the bankruptcy court, Mr. Baron would respectfully show the Court as follows:

PRELIMINARY STATEMENT

1. Since November 2010, Baron was placed into a receivership which effectively (a)

seized all his assets, (b) restricted him from managing his financial affairs, entering into

agreements, traveling, hiring attorneys or other professionals to represent his interests and (c)

denied Baron other basic freedoms, like the right to a jury trial and due process of law in

connection with defending against non-judgment creditor claims. (See, e.g., Attached Exh. A,

NDTX Case 3:09-cv-00988-F, Dkt 124: Receivership Order, dated Nov. 24, 2010).

2. The right to hire competent professionals has been a great necessity, as

demonstrated by the fact that the appointed receiver—which the Fifth Circuit Court of Appeals

determined was wrongfully appointed—and his professionals have accrued approximately $5.2

million in counsel fees during the receivership while paying alleged creditors nothing. (See

Attached Exh. C, NDTX Case 3:09-cv-00988-F, Dkt 1287: the “Receivership Fee Order”; See,

also, Netsphere, Inc. v. Baron, 703 F.3d 296 (5

Cir 2012)(the “Reversal Order”).

3. Baron’s misery, however, does not end there. The attorneys seeking to benefit

from the receivership filed a petition to force Baron into an involuntary bankruptcy in the same

court that originally recommended the receivership. See Netsphere, Inc, 703 F.3d at 312 (“the

bankruptcy court recommended a receiver, and the trustee then moved in the district court for the

appointment as recommended”); (See, also, Attached Exh. D, NDTX Bankr. Ct., Case 12-37921-

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sgj-7 Dkt 1 and attached Exh. E, NDTX Bankr. Ct. Case 12-37921-sgj-7 Dkt 239: “Findings” at

¶ 48). Based on the same disputed claims that led to the receiver being appointed, the

Bankruptcy Court has determined that Baron should be placed in an involuntary chapter 7

bankruptcy proceeding to pay these attorneys (the “Petitioning Creditors”). (See Exh. E,

Findings). This determination contravenes the Fifth Circuit’s decision in Netsphere.

4. The Fifth Circuit in Netsphere held that receiverships cannot be used to freeze an

alleged debtor’s assets pending a determination of the validity of the debt. 703 F.3d at 309; see,

also, In re Fredeman Litig., 843 F.2d 821, 824 (5

Cir. 1988)(court injunction that froze assets in

pending civil lawsuit set aside as an improper exercise of the court’s equitable powers). In

reaching its determination, the Netsphere Court found that the debts of the Petitioning Creditors

in this case had not been reduced to judgment and could not be the subject of a receivership

proceeding:

The receivership ordered in this case encompassed all of Baron’s personal

property, none of which was sought in the Netsphere lawsuit or the Ondova

bankruptcy order than as a possible fund for paying the unsecured claims of

Baron’s current and former attorneys that had not been reduced to judgment.

Netsphere, Inc., 703 F.3d at 310 (emphasis added).

5. The Fifth Circuit Court’s findings and ruling are binding on the district court and

the bankruptcy courts; moreover, when a higher court decides upon a rule of law, then that

decision should continue to govern the same issues in subsequent stages in the same case or

related cases. See Arizona v. California, 460 U.S. 605, 615 (1982). This rule of practice, called

the law of the case doctrine, promotes the finality and efficiency of the judicial process by

protecting against the agitation of settled issues. Christian v. Colt Indus. Operating Corp., 486

U.S. 800, 817 (1988). In the instant case, despite the Fifth Circuit’s findings that the claims of

Baron’s current and former attorneys had not been reduced to judgment, the Bankruptcy Court

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held that a ruling of the District Court compromising the claims somehow did constitute a final

judgment. (See Exh. E, Order at pg. 24: “[t]his bankruptcy court, on balance, believed and still

believes that the May 18, 2011 Fee Order is tantamount to a final judgment that forecloses an

argument of a bona fide dispute.”) Even assuming the law of the case doctrine did not apply, the

Court should apply the doctrine of collateral estoppel, because the issue of whether the

Petitioning Creditors’ claims were fully and finally litigated in the Netsphere case was

determined by the Fifth Circuit. As previously stated, the Fifth Circuit held that the claims were

not reduced to judgment and therefore, disputed.

6. The bankruptcy court’s conclusion is contrary to the Fifth Circuit’s decision that

the claimants in the receivership---now Petitioning Creditors in the involuntary bankruptcy---did

not have a claim reduced to a final judgment and were simply nonjudgment creditors that needed

to pursue their claims in a proper forum. The bankruptcy court, however, is not the proper forum

because the Bankruptcy Code prohibits imposition of an involuntary bankruptcy based on claims

filed by nonjudgment creditors. Seizure of Mr. Baron’s property through an involuntary

bankruptcy proceeding violates his Fifth Amendment right to due process of law. . The Fifth

Circuit determined, “everything subject to the receivership other than cash currently in the

receivership…should be expeditiously released to Baron…” Netsphere, Inc., 703 F.3d. at 313.

However, the Bankruptcy Court in this matter instead held that all such assets must be turned

over to the involuntary bankruptcy trustee. (Exh. E, Order at pg. 38: “Further, based on the

foregoing, a separate order will be issued henceforth regarding the turnover of assets from the

Receiver to the Bankruptcy Trustee.”) Baron‘s initial bankruptcy counsel, Mark Stromberg, had

a limited engagement that terminated when Petitioning Creditors were granted relief by the

Bankruptcy Court, but the Bankruptcy Court denied Baron’s pro se request for an extension of

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the imminent deadlines to find another attorney. (See Attached Exh. F, NDTX Bankr. Ct., Case

12-37921-sgj-7 Dkt 266). The Bankruptcy Court cites lack of good cause as the reason it denied

Baron’s request for counsel. Id. As such, and although the receivership was reversed, Baron still

does not have access to funds sufficient to hire the attorneys necessary to adequately represent

his interests.

7. Where representation in both the involuntary bankruptcy and appellate matters

would be inefficient and cost prohibitive for Baron, and where he has been unsuccessful in

securing bankruptcy counsel, Baron should be allowed limited access to his assets so that he can

properly hire counsel to assist with the prosecution of his appeal of the merits of this involuntary

bankruptcy. As demonstrated below, and as instructed by the U.S. Supreme Court and the Fifth

Circuit (which vacated the appointment of the receiver), there is a serious legal question as to

whether a federal court can essentially freeze a party’s assets based on claims made by non-

judgment creditors. The Bankruptcy Code recognizes non-judgment creditors have no right to

place a citizen into involuntary bankruptcy where, as here, the Bankruptcy Code itself mandates

that claims subject to a bona fide dispute as to liability or amount (a) disqualify petitioning

creditors from commencing an involuntary proceeding and (b) cannot be taken into account in

determining whether an alleged debtor is insolvent. See 11 U.S.C. § 303(b)(1), (h).

8. A stay should be granted pending appeal because Baron: (a) will likely succeed on

the merits in light of the Fifth Circuit’s findings in Netsphere; (b) will be irreparably harmed if

this proceeding is allowed to move forward, (c) will suffer a harm far greater than any other

party; and (d) can show that public policy favors the imposition of a stay in this case.

Accordingly, the Bankruptcy Court should grant a stay of the order for relief pursuant to

Bankruptcy Rule 8005.

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II.

BACKGROUND

1. The issues in this case have their genesis in parallel proceedings against Jeff

Baron in a separate corporate bankruptcy case, In re Ondova, as well as Netsphere. In these

proceedings, Baron was deprived of any right to hire his own counsel for over two years, when

District Judge Furgeson appointed the undersigned counsel. Unfortunately, counsel was denied

compensation for the same types of fees expenses that were later granted to the Receiver.

Simply stated, Baron cannot fully and effectively defend himself against seizure of property

when the judicial system grants millions in defense to a Receiver and a minute fraction of that

amount to Baron for his defense. Simply stated, this sort of double standard violates due

process. Moreover, despite the seizure of all his property, and allegations of criminal conduct

against him, the Receiver threatened Baron with contempt if he attempted to hire his own

attorney.

. On December 2., 2010, the receiver sent the following letter to Mr. Baron:

As you know, I am counsel for the Receiver, Peter Vogel. The Receiver forwarded

to me your email below.

…

Based on the powers and duties provided to the Receiver within the Receiver

Order, the Receiver has retained me and others at my firm to serve as counsel.

Furthermore, based on the obligations imposed upon you under the Receiver

Order, you – and that means you, personally, and not indirectly through any

lawyer, agent, or any third party individual – shall cooperate and assist me and

others at my law firm and provide us with information that we deem necessary to

effectuate the Receiver Order.

The Receiver is furthermore instructing you as follows:

First, you are expressly prohibited from retaining any legal counsel. Should

you retain any legal counsel, the Receiver may move the Court to find you in

contempt of the Receiver Order.

(Attached Exh. B, 5

Cir. Ct. App. Case 10-11202, Dkt. 00511388248: Email from Barry

After nearly 2 years after the receivership order, The District Court ultimately allowed Baron to hire the

undersigned attorney, where it approved payment of $50,000 over the Receiver’s objections.

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Golden, Gardere Wynne Sewell LLP to Baron, dated Dec. 2, 2010)(emphasis added). After two

years of Mr. Baron being in the receivership, the Fifth Circuit reversed the receivership order.

While the Court did not specifically use the words “due process”, it is readily apparent that the

Court found that the freezing and seizure of property through a receivership proceeding violated

due process. That conclusion is no less valid when the same alleged creditors come to

bankruptcy court with the same unsecured claims that have not been reduced to judgment.

Martin Thomas was appointed as bankruptcy counsel to Mr. Baron in the Ondova case and was

purportedly instructed by either the receiver or Judge Jernigan that he could not file pleadings.or

make any statements to the court to represent Baron’s interest . Judge Furgeson became irate

when he learned that Martin Thomas had been instructed not to file any pleadings to defend Mr.

Baron’s interests in the Ondova case, telling Mr. Thomas that he did not agree to Thomas

$10,000 a month to be a “potted plant.” [Exhibit B-1, September 27, 2010 hearing]. Judge

Furgeson understood that the judiciary cannot appoint lawyers who create only the appearance,

but not the reality of representation by counsel.

2. On December 18, 2012 (the “Petition Date”), several parties (“Petitioning

Creditors”) who had just been rebuffed by the Fifth Circuit in the receivership appeal, filed an

involuntary chapter 7 bankruptcy petition (the “Involuntary Petition”) against Baron in this

Bankruptcy Court. This involuntary proceeding was filed approximately two hours after the

Fifth Circuit Court of Appeals (the “Fifth Circuit”) entered an order (the “Reversal Order”) on

the same date: (a) reversing an earlier order appointing a receiver over all of Mr. Baron’s

personal assets (the “Receivership Order”), previously entered by the United States District

Court for the Northern District of Texas (the “District Court”) on November 10, 2010, in a

separate lawsuit styled Netsphere, Inc., et al. v. Jeffrey Baron, Civil Action No. 3:09-cv-0988-L

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(the “Lawsuit”) and (b) instructing the District Court to wind down the receivership estate and

direct the receiver, after satisfaction of certain expenses incurred by the receiver, to expeditiously

return the property held and managed by the receiver (the “Receivership Property”) to Baron.

See Netsphere, Inc., 703 F.3d at 313. This never happened.

3. Rather, on June 17 and 18, 2013, the Bankruptcy Court held an evidentiary

hearing regarding the Involuntary Petition. (See Attached Exh. G & G-1, In re Jeffrey Baron,

Case No. 12-37921-sgj7, Trial Transcript of June 17, 2013.) Then, on June 26, 2013, the

Bankruptcy Court entered the Order for Relief, adjudicating that the involuntary chapter 7

proceeding against Baron was appropriate and subjected Baron to such proceedings. (Attached

Exh. H, NDTX Bankr. Ct., Case 12-37921-sgj-7 Dkt 240: “Order for Relief”.) The Order for

Relief is a final judgment that can be appealed pursuant to 28 U.S.C. § 158.

4. On July 8, 2013, Baron timely filed a Notice of Appeal, appealing the Order for

Relief to the District Court. (Attached Exh. U, NDTX Bankr. Case 12-37921-sgj7, Dkt 253:

Notice of Appeal.) Baron’s argument on appeal, in large part, centers around the Fifth circuit

precedent in Netsphere where it found that the Receivership Order should never have been

entered in the first instance. Significantly, the Fifth Circuit also found that the district court erred

by creating a receivership to satisfy the debts of non-judgment creditors, which included the

Petitioning Creditors in the instant case. Netsphere, Inc. v. Baron, 703 F.3d 296. Before the

appellate court was an interlocutory order entered by Judge Furgeson on May 11, 2011 (Attached

Exh. I, NDTX Case 3:09-cv-00988-F, Dkt 575) (the “Compromise Order”), after an evidentiary

hearing: (a) directing that the Receiver pay twenty two (22) lawyers who previously represented

Baron and other entities $870,237.19 for legal services rendered and (b) reserving Baron’s right

to assert claims against those lawyers. This Compromise Order was stayed by the District Court

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on June 18, 2012. (Attached Exh. J, NDTX Case 3:09-cv-00988-F, Dkt 987: the “Fee Stay

Order”) because the Court did not wish to enter a final judgment until the Fifth Circuit ruled on

the validity of the receivership. The Fifth Circuit vacated the receivership order finding that the

claims being made in the receivership were unliquidated claims that had not yet been reduced to

judgment and could not be the subject of a receivership. Netsphere, Inc., 703 F.3d at 310.

5. In subsequent proceedings, the District Court reiterated the Fifth Circuit’s holding

in its Receivership Fee Order entered on May 29, 2013, specifically holding that “the Fifth

Circuit found that this [District] Court could not order the payment of these fees from the

Receivership estate….” However, in contravention to both the Fifth Circuit and District Court

orders, the Bankruptcy Court held that there was no bona fide dispute regarding the Petitioning

Creditors’ claims and thus (a) the Petitioning Creditors had standing to bring the Involuntary

Petition and (b) the insolvency standard for the Involuntary Petition under section 303(h)(1) had

been met. (See Exh. E, Findings.)

6. This Motion is filed because the involuntary bankruptcy process was wrongfully

commenced and has denied Baron due process of law and equal protection under the law, in that

all of his assets have been taken away from him (despite the Reversal Order by the Fifth Circuit),

and he does not have adequate funds with which to hire counsel to defend against the Involuntary

Petition while the trustee, receiver and/or opposing parties appear to have or had unfettered

access to millions of dollars of Baron’s assets. If a stay is granted and the Reversal Order is

implemented as mandated by the Fifth Circuit, Baron will have access to funds necessary to

adequately prosecute the appeal on the Involuntary Petition, as well as defend himself in the

Lawsuit.

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III.

RELIEF REQUESTED

Standard for Stay Pending Appeal

7. Bankruptcy Rule 8005 provides, in pertinent part:

A motion for stay of the judgment, order, or decree of a bankruptcy judge,

for approval of a supersedeas bond, or for other relief pending appeal must

ordinarily be presented to the bankruptcy judge in the first instance.

Notwithstanding Rule 7062 but subject to the power of the district court . .

. , the bankruptcy judge may suspend or order the continuation of other

proceedings in the case under the Code or make any other appropriate

order during the pendency of an appeal on such terms as will protect the

rights of all parties in interest. A motion for such relief . . . may be made

to the district court . . . , but the motion shall show why the relief . . . was

not obtained from the bankruptcy judge.

Fed. R. Bankr. P. 8005. While Bankruptcy Rule 8005 expressly authorizes that a stay motion can

also be directly filed in the district court with original jurisdiction on certain grounds, Local

District Court Rule 8005.1 provides that a motion for stay pending appeal must first be made in

the bankruptcy court.

8. The Fifth Circuit employs a four part test in determining whether to grant a stay

pending appeal:

(1) whether the movant has made a showing of likelihood of success on

the merits; (2) whether the movant has made a showing of irreparable

injury if the stay is not granted; (3) whether the granting of the stay would

substantially harm the other parties; and (4) whether the granting of the

stay would serve the public interest.

Ruiz v. Estelle, 666 F.2d 854, 856 (5

Cir. 1982); Arnold v. Garlock, Inc., 278 F.3d 426, 438-39

Cir. 2001); Hunt v. Bankers Trust Co., 799 F. 2d 1060, 1067 (5

Cir. 1986); In re Texas

Equip. Co., Inc., 283 B.R. 222, 227 (Bankr. N.D. Tex. 2002). The Fifth Circuit, however, “has

refused to apply these factors in a rigid mechanical fashion.” Reading & Bates Petroleum Co. v.

Musslewhite, 14 F.3d 271, 272 (5

Cir. 1994). Accordingly, courts within the Fifth Circuit have

determined that “the absence of any one factor is not fatal to a successful motion for stay . . .” In

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re Permian Producers Drilling, Inc., 263 B.R. 510, 515 (W.D. Tex. 2000) (citing In re First Savs.

Ass’n, 820 F.2d 700, 709 n.10 (5

Cir. 1987)); see also Garlock, 278 F.3d at 438-39 (noting that

while “each part [of the stay pending appeal test] must be met . . . the appellant need not always

show a probability of success on the merits; instead, the movant need only present a substantial

case on the merits when a serious legal question is involved and show that the balance of the

equities weighs heavily in favor of granting stay”) (internal citations omitted).

9. Application of the foregoing standard to the instant case warrants the imposition

of a stay pending appeal to preserve Baron’s due process rights and equal protection under the

law, which includes a meaningful right to appeal the Order for Relief.

(1) Baron is likely to succeed on the merits.

(a) Petitioning Creditors Lack Standing

10. Section 303(b) of the Bankruptcy Code provides, in relevant part, that an

involuntary chapter 7 case is properly commenced “by three or more entities, each of which is

either a holder of a claim against such person that is not contingent as to liability or the subject

of a bona fide dispute as to liability or amount . . . if such noncontingent, undisputed claims

aggregate at least $15,325 . . .” 11 U.S.C. § 303(b)(emphasis added). Unless each of the

petitioning creditors comply with this provision in section 303(b), they lack standing to

commence an involuntary petition. See Whitmore v. Arkansas, 495 US 149, 154 (1990). The

holdings of the District Court and Fifth Circuit in the Lawsuit and subsequent appeal

unequivocally prove that all of the Petitioning Creditors’ claims are, at least, the subject of a

bona fide dispute as to liability or amount and therefore such parties lack the requisite standing.

The Fifth Circuit’s Reversal Order effectively reversed the Compromise Order, specifically

holding that a receivership cannot be used to collect or litigate disputed claims:

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[F]or those unpaid attorneys who had filed claims, the claims had not

been reduced to judgment such that a receiver would have been

proper to “set aside allegedly fraudulent conveyances by Baron.”

Netsphere, Inc., 703 F.3d at 308. The Court further held that: “Baron’s former attorneys were

free to make claims” or “the attorneys could file suit in a court of competent jurisdiction to

collect the fees owed.” Id. The Fifth Circuit noted that their holding was supported by the

Supreme Court’s decision in Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc.,

527 U.S. 308, 310 (1999). Netsphere, Inc., 703 F.3d at 310. In Grupo Mexicano, the Supreme

Court held a federal district court did not have authority to issue a preliminary injunction

preventing defendant from transferring assets in a more action for money damages:

[F]ederal Courts in this country have traditionally applied the principal that courts

of equity will not, as a general matter, interfere with a debtor’s disposition of his

property at the instance of a nonjudgment creditor.

Grupo at 329. Indeed, the Fifth Circuit found that “[T]he case before us is similar to Grupo

Mexicano to the extent that the receivership remedy was for the purpose of controlling Baron’s

transferring of funds that were to be paid to attorneys—nonjudgment creditors.” Netsphere,

Inc., 703 F.3d at 310 (emphasis added). It is well settled that the factual findings and legal

holdings of the Fifth Circuit are binding on all lower courts.

11. Judge Furgeson’s ruling during the Netsphere receivership similarly demonstrates

that there has not been a final adjudication of the Petitioning Creditors’ claims. The Petitioning

Creditors were initially “stayed by the Receivership Order from taking any action to establish or

enforce any claim, right, or interest” against Baron or the receivership assets. (Exh. A, Receivership

Order at 12.) Subsequent to entry of the Receivership Order, and without any lawsuits pending

before the District Court to fully and fairly adjudicate the Petitioning Creditors’ claims, the District

Court entered the Compromise Order, making a preliminary determination that Baron owed 22

lawyers, including the Petitioning Creditors, $870,237.19, which could be paid from the Receivership

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Estate.

(Exh. H, Compromise Order.) The district court held that Baron’s counterclaims would be

litigated at a later time. (Id. at ¶ 36.)

12. The District Court decided that the unliquidated fee claims of Baron’s former

attorneys had not properly adjudicated to any finality, especially given the then-pending appeal

to the Fifth Circuit. In the Compromise Order, the District Court itself stated:

[T]he Court understands that certain of the claimants of the Former

Attorney Claims are claiming that, in addition to the amounts of the

Former Attorney Claims, they are entitled to bring Putative Claims.

Furthermore, the Court understands that eight of the claimants of the

Former Attorney Claimants are seeking the amounts not being awarded to

them because of the Fee Cap Reduction (and which these claimants have a

right to challenge through motion before this Court or through an appeal).

The Court also understands that Baron claims that certain of the claimants

of the Former attorney Claims are allegedly liable for legal malpractice

and other civil claims.

13. (Exh. H, Compromise Order ¶ 36.)(emphasis added). These rulings are an

objective finding that the Petitioning Creditors’ fee claims were subject to a bona fide

dispute as to liability or amount. That is precisely why the District Court held that “Baron

maintains any and all rights to bring, after the end of the Receivership, the Baron Claims”

(which are defined as “legal malpractice and other civil claims”). (See Exh. H, Compromise

Order ¶¶ 35-36.)(emphasis added.) By definition, partial interlocutory orders have no collateral

estoppel effect because Baron was not allowed a full and final adjudication of his

counterclaims, as well as the law firm claims. The Bankruptcy Court relies on Gupta v. E. Idaho

Tumor Inst., Inc. (In re Gupta), 394 F.3d 347, 351 n.4 (5

Cir. 2004) to support its proposition that

collateral estoppel applied to the reversed receivership. (Exh. E, Findings at 25). However, the Fifth

circuit, in Gupta, actually reversed the bankruptcy court and district court for erroneously according

The hearing held by Judge Furgeson can only, at best, be described as a truncated hearing held only to determine

the amount of the claims.

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collateral estoppel effect to a state court judgment when the issue was not actually fully litigated.

Gupta v. E. Idaho Tumor Inst., Inc. (In re Gupta), 394 F.3d 347 (5

Cir. 2004). In Gupta, after the

appellant debtor sought bankruptcy relief following a state court judgment entered in favor of

Appellee co-joint venture, the bankruptcy court found that the debtor was essentially a managing

partner of the parties’ joint venture. Id. The Fifth Circuit unequivocally held no such “finding” was

litigated or made in the state court proceedings and collateral estoppel could not attach to a non-

existent finding, as here. See Id. This Court, however, should afford collateral estoppel effect to the

Fifth Circuit findings that the Petitioning Creditors’ claims are unsecured claims not reduced to

judgment and Bankruptcy Court lacks jurisdiction under the Code. While forcing clients to pay legal

fees may, in some cases, be a proper exercise of judicial power, the bankruptcy court lacks the

authority to impose an involuntary bankruptcy over an alleged debtor to achieve that goal. Moreover,

the Compromise Order is void, as a matter of law, because it was based solely on the premise

that a properly appointed receiver can waive an individual’s (ie, Baron’s) 7

Amendment right to

a jury trial in a contractual dispute based on state law. (See Exh. I, Compromise Order ¶¶ 14-20.)

Baron properly asserted these jury trial rights before the preliminary “assessment” of any

attorney fees was made and he was denied the opportunity to fairly, properly and justly contest

these assessments by the Receiver. (Attached Exh. K, NDTX Case 3:09-cv-00988-F, Baron’s

Response, Objection, Motion for Leave to File, and Motion for Relief with Respect to Receiver

Assessment of Former Attorney Claims, Dkt 443 at pg. 16 (“Notably, Jeff Baron object (sic) to

this process, and demands a jury trial for each and every claim against him, as his constitutional

right.”). When the Fifth Circuit reversed the Receivership Order, however, the Court effectively

vacated the receiver’s authority to enter into the Compromise Order or to waive Baron’s

“Dr. Gupta was essentially a managing partner of the party's joint venture. Unfortunately,

no such "finding" was litigated or made in the state court proceedings, and, collateral

estoppel cannot attach to a non-existent finding.” Gupta, 394 F.3d at 351.

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constitutional rights to contest a disputed claim. Hernandez v. Ebrom, 289 S.W.3d 316, 325 (Tex.

2009) citing Sclafani v. Sclafani, 870 S.W.2d 608, 611 (Tex. Ct. App. 1993)(“The setting aside of

an order of receivership has ‘the effect of nullifying all intervening acts of the receiver…”).

14. Moreover, on June 2012, recognizing the interlocutory nature of its Compromise

Order, the District Court entered an Order Regarding Motion to Clarify Instruction to Receiver

on Payments to Former Baron Attorneys (See Exh. J, Fee Stay Order), which unequivocally

stayed the effect of the Compromise Order, including the payment of any fee claims by the

former Baron attorneys, and 2 years later (on May 29, 2013) the District Court even held that this

stay was to be enforced permanently, in light of the Reversal Order. (Exh. H, Fee Order).

15. In winding down the receivership, the District Court entertained fee applications

from various law firms representing, or purporting to represent, the Receiver. On May 6, 2013,

the Petitioning Creditors filed Petitioning Creditors’ Omnibus Comment to Receivership

Professional Fee Applications (“Omnibus Comment”) (Receivership Fee Order), wherein they

requested that the District Court limit the fees awarded to the Receiver and his professionals, so

that there would be amounts left in the Receivership Estate to pay the Petitioning Creditors’

claims. (See Attached Exh. L, NDTX Case 3:09-cv-00988-F, Dkt 1268: Omnibus Comment ¶

12.)

16. On May 29, 2013, in response to the Omnibus Comment—which was interpreted

as a general objection—the District Court entered an Order On Receivership Fees (Exh. C,

Receivership Fee Order), wherein the District Court made the following important findings

regarding the Fee Stay Order: (a) the Petitioning Creditors’ “claims total approximately

$1,400,000.00” (tellingly, not the amount previously allowed under the Compromise Order) and

(b) the Fee Stay Order actually “stayed its [Compromise O]rder and instructed the Receiver to

refrain making such payments until the Fifth Circuit ruled on the Receivership.” (Exh. C,

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Receivership Fee Order at 44)(emphasis added). More importantly, in light of the Reversal

Order, the Receivership Fee Order now reaffirmed the stay under the Fee Stay Order,

specifically finding that that “the Fifth Circuit found that this Court could not order the payment

of these fees.” (Exh. C, Receivership Order at 45 and n.16.) Thus, the Compromise Order was

essentially vacated--and properly so, as Baron, at a minimum, was denied the constitutional right

to contest the disputed claims in front of a jury of his peers.

17. On February 20, 2013, given the Fifth Circuit appeal, the uncertainty of the

Receivership Order and the lack of a fair trial on the merits of the Involuntary Petition, the

Bankruptcy Court itself issued an oral ruling that the involuntary bankruptcy against Baron was

“stayed/abated.” (See Attached Exh. M, Transcript of Bench Ruling Motion for Summary

Judgment (Doc 52) and Status Conference before the Honorable Stacey G. Jernigan, United

States Bankruptcy Judge, dated February 20, 2013 at pg. 44) Since that time, the Fifth Circuit has

affirmed its Reversal Order, but the Bankruptcy Court, instead of taking its cue from the higher

court, forged forward with the involuntary proceeding against Baron.

18. To be abundantly clear, the issue here is not whether there is a dispute as to

whether Baron hired almost all of the Petitioning Creditors. The issue here is whether the

Petitioning Creditors performed under their contractual arrangements with Baron and if Baron

paid them according to their contractual arrangements and, if not, whether their fee claims are

subject to a bona fide dispute as to liability or amount. Simply stated, these amounts are

disputed. The Fifth Circuit found, as fact, that the claims were disputed and not reduced to

judgment. The District Court recognized that the claims were subject to a bona fide dispute in

the Compromise Order, the Fee Stay Order and the Receiver Fee Order. Baron did not file

lawsuits or counterclaims against the law firms (Petitioning Creditors) because he was deprived

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of his right to fully defend himself due to the Receivership Order that was ruled invalid and,

now, due to an involuntary bankruptcy where the Petitioning Creditors and the Bankruptcy

Court are simply repeating the same mistakes that were reversed by the Fifth Circuit.

19. The Receivership’s and professionals’ recent fee applications in the District Court

(Attached Exh. N, NDTX Case 3:09-cv-00988-F, Dkts 1229, 1232 and 1233) unquestionably

demonstrate that (a) the Receiver has accrued approximately $5.2 million in professional fees

over approximately 2 years (or an average of $200,000 per month) and (b) competent counsel is

absolutely required to represent a party—especially the defendant—in a case like this. See Id. In

light of the reality, the Bankruptcy Court’s prior offer on January 16, 2013, to pay proposed

bankruptcy counsel for Baron $25,000 to defend against the Involuntary Petition (for 6 months)

and the District Court’s prior payment of $50,000 for counsel in the Lawsuit (a matter with over

3,000 docket entries) are mere token gestures in clear contravention of due process of law and

equal protection under the law. (See Exh. O, Transcript of Hearing Status Conference, dated

January, 16, 2013: “I am going to issue a recommendation to Judge Furgeson that he allow

25,000 dollars to be released from the receivership … to pay counsel of Mr. Baron’s choice, in

connection with contesting the involuntary petition.”)

20. The due process clause of the U.S. Constitution reads: “[N]or shall any State

deprive any person of life, liberty, or property, without due process of law.” U.S. Const. amend.

XIV, § 1. Substantive due process cases inquire whether a statue or government action “‘shocks

the conscience’ or interferes with rights ‘implicit in the concept of ordered liberty.’” United

States v. Salerno, 481 U.S. 739, 746 (1987). Baron argues that the fee limitation or restriction

imposed by the Bankruptcy Court unconstitutionally interferes with Baron’s substantive due

In actuality, Baron’s pre-involuntary counsel billed in excess of $125,000.

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process rights to access the courts and to appeal by chilling qualified lawyers from taking his

case. Baron’s counsel requested funding on May 11, 2011. [Exhibit 0-1] Indeed, defense of

Baron against multitudes of lawyers in the Bankruptcy Court is estimated to cost a minimum of

$500,000 in attorney fees to Baron alone where the Bankruptcy Court’s Fee limitation of $25,000

has the effect of precluding Baron from representation in the complex matter. This

comparatively small retainer likely contributed to the limited engagement of Mark Stromberg

and Alan Busch, Baron’s pre-involuntary lawyers, both of whom filed a motion to withdraw on

the Bankruptcy Court entering an Order for Relief placing Baron into involuntary proceedings.

(Attached Exh. P, NDTX Bankr. Case No. 12-37921, Dkt Nos 241 and 243).

21. The Bankruptcy Court’s Fee limitation further denies Baron equal protection

under the law. The United States Constitution provides that no person shall be denied equal

protection of the laws. U.S. Const. amend. XIV, § 2. Equal Protection. This is essentially a

mandate that similarly situated individuals be treated alike, absent a sufficient reason to justify

the disparate treatment. See City of Cleburne v. Cleburne Living Ctr., Inc., 473 U.S. 432, 439

(1985); Corn v. New Mexico Educators Fed. Credit Union, 889 P.2d 234, 244 (NM Ct. App.

1994). The court in Corn evaluated an equal protection challenge to a fee limitation and declared

the fee limitation unconstitutional because it applied only to one side of the litigation. Id. at 244.

As applied, the Bankruptcy Court’s orders denying or otherwise prohibitively restricting Baron’s

Fee applications for attorneys creates two classes of litigants: those who are entitled to unfettered

access to Baron’s funds for attorney fees (such as the receiver and the trustee); and Baron

himself, whose assets are now property of the bankruptcy estate such that he cannot afford

representation in the bankruptcy court.

In facing an army of lawyers in the Bankruptcy Court

Notably, Baron does not work and has survived on an allowance he received from the court appointed receiver. As

the receivership winds down, Baron will not only have issues with attorney fees, but also living expenses.

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while he is unable to access funds to obtain adequate representation, Baron is being denied equal

protection under the law.

22. The Petitioning Creditors and the Bankruptcy Court were, as a matter of law,

bound to follow the rulings of the Fifth Circuit and the District Court. Because the Bankruptcy

Court incorrectly applied the doctrine of collateral estoppel and relied on a case that reversed

another bankruptcy court that incorrectly relied on the doctrine of collateral estoppel, it erred by

failing to analyze the Fifth Circuit’s findings and determination that the law firms’ claims had not

been reduced to judgment and that they could not litigate disputed state law claims in a

receivership proceeding. Regardless of the amount of the Petitioning Creditors’ claims, their

claims are subject to a bona fide dispute as to liability or amount and Baron has been essentially

stayed—because of the sequestration of all his assets—from filing appropriate actions to further

demonstrate the legitimate dispute.

(b) Petitioning Creditors Failed to Establish the Insolvency

Requirement.

23. Section 303(h) of the Code sets forth the insolvency requirement for an

involuntary filing. That section provides, in relevant part, that a bankruptcy court must find,

after conducting a trial, that “the debtor is generally not paying such debtor’s debts as such debts

become due unless such debts are the subject of a bona fide dispute as to liability or amount.”

11 U.S.C. § 303(h)(emphasis added).

24. The Bankruptcy Court found that Baron paid all of his ordinary debts other than

legal expenses as they become due. (See Findings ¶¶ 51, 54.) But, as discussed above, even

before the Receivership Order was entered on November 10, 2010, Baron has been disputing the

Petitioning Creditors’ fee claims as to liability or amount. (See, e.g., Exh. K, Dkt. 443). He has

never had the fair opportunity to litigate or defend against these claims, because the Receiver

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purported to waive Baron’s jury trial rights. (Exh. I, Compromise Order ¶¶ 16-20.) Even in the

summary proceeding to which Receiver agreed prior to the Compromise Order, Baron lodged

objections as to the amount or liability of the Petitioning Creditors’ fee claims. (Exh. K, Dist. Ct.

Dkt. 443). The fact that the Fifth Circuit reviewed the legality of the Receivership Order and

ruled in Baron’s favor on the ground that the District Court could not appoint a receiver to

protect the claims of non-judgment creditors demonstrates that there was a bona fide dispute as

to their claims.

25. There was, and continues to exist, bona fide disputes as to the Petitioning Creditor

and other attorney-creditor claims is the fact that many of their disputes were never resolved in

state courts, for example:

(1) Jeff Baron v. Gerritt M. Pronske, Individually and Pronske & Patel, P.C., District

Court, Dallas, Texas, Cause No. 10-11915 removed by Gerritt Pronske to

Bankruptcy Court in 2010; stayed and pending before the instant Bankruptcy

Court Judge Stacey Jernigan.

(2) David Pacione v. Jeffrey Baron, District Court, Dallas, Texas, Cause No. DC-10-

06464 (Case Type: Debt).

(3) Jeffrey T. Hall v. Jeffrey Baron, Dallas, Texas, In the Justice Court, Precinct 3,

Place 3, Cause No. JC-10-00721N.

(4) Freidman & Fieger, LLP Jeffrey Baron and The Village Trust, v. Freidman &

Feiger, LLP, Lawrence Friedman, Individually, and Ryan Lurich, Individually,

Dallas, Texas, 44

Judicial District, Cause No. DC-10-12100 (Case Type: Debt).

(Attached Exh. Q.)

26. Moreover, even the Bankruptcy Court grappled with the fact that Baron has been

prevented from paying his former lawyers’ fees—the only debts at issue—since Mr. Baron’s

assets have been tied up in a Receivership for almost three years (a Receivership that was

overturned by the Fifth Circuit). (See Exh. E, Findings.) After being placed in receivership,

Baron had no rights nor did he personally possess assets to settle the Petitioning Creditors’

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claims. (E.g., Exhs. A, Receivership Order and B, Corr. From Receiver’s Attorneys). Baron was

not allowed to file counterclaims or engage in discovery—rights afforded to individuals as a

matter of due process. Id. Simply stated, Baron had no control whatsoever the Receivership

Assets; only the District Court did, and it failed to pay the Petitioning Creditors during the nearly

three years of receivership – not Baron. See Id. Even after the Fifth Circuit vacated the

Receivership Order in December 2012, the District Court was still in charge of winding down the

receivership. Netsphere, Inc., 703 F.3d 296, 313-314. Ultimately (and as late as May 29, 2013),

the District Court ordered the Receiver not to pay the Petitioning Creditors’ claims. (Exh. C, Fee

Order).

27. Baron has not had the right or the ability to generally pay his debts as they

become due.” (See Findings ¶ 58.) The Bankruptcy Court, nevertheless, found that Baron was

not paying his debts timely, because “there was more than enough value from the assets in the

Receivership to pay the legal fees (if Baron had wanted to pay the fees and cease the

Receivership at any time.)” (see id.) This finding is erroneous for several reasons. Most notably,

it is well settled that a federal court cannot freeze a defendant’s assets on claims of a non-

judgment creditor. Netsphere, Inc., 703 F.3d at 309.

a. The bankruptcy court found that Baron “should have settled the case” after being

placed in a receivership. First, this finding is clearly erroneous as Baron filed a

wind down plan to resolve the issues consistent with the Fifth Circuit’s decision.

[Exhibit V, Baron’s Wind-Down Plan]. The finding is also contrary to Netsphere

and Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S.

308 (1999). Baron had no ability to settle anything because he was in a

receivership and unrepresented by trial counsel until September 27, 2012.

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Baron’s right to settle or otherwise enter into contracts was limited and placed in

the hands of a receiver.

b. The Court’s finding also overlooks the fact that Mr. Baron repeatedly tried to

settle the claims in the district court through a wind-down plan [Exh. H], a

separate settlement plan submitted to the district court [Dist. Dkt. 1284] and

actually submitted a Rule 9019 Joint Motion to Approve Compromise Agreement

and Wind-Down Plan [Dkt. 228], which was rejected by this Court. In May, 2011,

Mr. Baron tried to resolve the case, but his plans were rejected. [Exhibit V].

29. Bankruptcy Rule 1018 provides that, “unless the [bankruptcy] court directs and

except as otherwise prescribed on Part 1 of the [Bankruptcy R]ules, Bankruptcy Rule 7062

applies to all proceedings contesting an involuntary proceeding. See Fed. R. Bankr. P. 1018.

Bankruptcy Rule 7062 incorporates Rule 62 of the Federal Rules of Civil Procedure, which

provides that “no execution may issue on a judgment, nor may proceedings be taken to enforce

it, until 14 days have passed after its entry.” Fed. R. Bankr. P. 7062.

30. Ignoring Bankruptcy Rules 1018 and 7062, the Order for Relief demands Baron

file a list of creditors within 7 days after the order, and bankruptcy schedules and statement of

financial affairs within 14 days after the entry of such order. (Exh. H, Order for Relief). Most

disturbing is that after Baron’s counsel filed a motion to withdraw the next day, the Bankruptcy

Court (a) denied Baron’s request for a small extension so that he could find representation for the

complex involuntary proceedings, and (b) offered the Petitioning Creditors the option to “seek

the imposition of sanctions” against a non-represented Baron if he failed to independently

complete the complex tasks. (Exh. H). Also disturbing is that, while even the newly appointed

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chapter 7 trustee has had an opportunity to engage competent bankruptcy counsel at a cost to the

estate, Baron has not. There is no reason that the Order for Relief should not be stayed to allow

Baron the opportunity to find counsel to properly prosecute his appeal of the Order for Relief and

pending litigation.

(2) Baron will suffer irreparable injury if the stay is not granted

31. The Fifth Circuit has already held that liquidation of Baron’s assets is sufficient to

show the irreparable injury necessary for a stay. See Netsphere, Inc., 703 F.3d 314, n.2 (“We

stayed the closing on sales resulting from an auction of domain names. Our ruling means no

closing may occur, and the stay is made permanent.”)

32. The Northern District of Texas District Court has also previously determined that

irreparable harm would occur if Receivership assets were sold or otherwise liquidated prior to a

full hearing. (Attached Exh. R, NDTX Case 3:12-cv-04489-L, Dkt. 5 (“Due to the urgency of the

motion…and the irreparable injury that could occur if the sale is permitted to proceed, the

court grants Jeffrey Baron’s Emergency Motion for Stay Pending Appeal…”).)(emphasis added.)

33. After the Receivership attorneys retain the approximately $5.2 million dollars in

fees from the Receivership estate, only $300,000 or so in liquid assets will remain. (See Exh. C.)

Should this Court fail to stay the Order for Relief, and in order to pay the nearly $5,000,000 in

disputed lawyer fees the bankruptcy court will invariably allow the trustee to move forward to

liquidate the same spendthrift trust assets the District and Fifth Circuit stayed them from

liquidating on the eve of the Fifth Circuit’s Reversal Order. An action that has already been

determined to cause irreparable harm.

34. Moreover, if a stay pending appeal is not granted, Baron’s right to due process of

law will be eviscerated. Since the Receivership Order was entered, all of Baron’s assets have

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been frozen, precluding or otherwise limiting Baron’s right to hire counsel to adequately defend

against the disputed claims being made by various nonjudgment creditors, including the merits of

the Involuntary Petition.

Baron has pointed this problem out to the Bankruptcy Court and

District Court in motions requesting access to funds to hire counsel. (See, e.g. Attached Exhs. B,

K, O, and S: Baron’s Motions for Fees.) At best, the Bankruptcy Court has denied or otherwise

strictly limited Baron’s requests for fees. (Exh. O.) The Bankruptcy Court is now claiming

exclusive jurisdiction over all of Baron’s assets and is even looking to bring more assets into the

bankruptcy estate through the assets of Novo Point, LLC and Quantec, LLC, two entities that

Baron asserts are part of a spendthrift trust associated with research to cure juvenile autoimmune

Type I Diabetes. (See attached Exh. T, Bankr. Ct. Dkt. 251: Order Setting Status Conference.) As

discussed above, the Bankruptcy Court is even compelling Baron, under threat of sanctions, to

actively participate in this complicated bankruptcy pro se and thereby waive many of his

constitutional rights. (See, e.g., Order for Relief (“if the debtor does not prepare and file the list

of creditors [within 7 days], schedules and statement of financial affairs [within 14 days]…[t]he

petitioning creditors and the bankruptcy trustee may seek the imposition of sanctions against the

debtor…”).)

35. Baron asserts that the involuntary bankruptcy proceeding is nothing more than a

continuation of the receivership---both dedicated to collecting debts for lawyers who possess

nothing more than disputed claims where, similarly, Baron has been unable to pay for bankruptcy

counsel to adequately defend himself. Given the deck of cards stacked against him, and without

help from a higher court, who knows how many of Baron’s personal freedoms will continue to

be sacrificed?

After Baron’s attorney of choice was denied his request for a full retainer, Baron hired Mark Stromberg, whom was

the only attorney Baron could find to accept the Bankruptcy court’s offer of $25,000. Stromberg only agreed to the

representation if limited to matters prior to an Order for Relief.

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36. Indeed, Courts have consistently held that a deprivation or violation of rights

constitutes irreparable harm warranting a stay pending an appeal. Hoekstra v. Oak Cluster

Comm. Council (In re Hoekstra), 268 B.R. 904, 907 (Bankr. E.D. Va. 2000) (irreparable harm

found when creditor stripped of potential lien rights); In re Sphere Holding Corp., 162 B.R. 639

(E.D.N.Y. 1994) (irreparable harm of debtor forced to close business due to pressure by

creditors); In re Allegheny Health Education and Research Foundation, 252 B.R. 309 (Bankr.

E.D. Pa. 2002) (finding irreparable harm where party being denied rights.)

37. Moreover, the dissipation of assets by a Trustee in this case will simply result in a

pyrrhic victory if Mr. Baron prevails in this appeal. The Trustee and lawyers will likely charge

the same kind of fees as the Receiver and a stay of the proceedings will protect Baron’s assets.

(3) Granting the Stay Will Not Substantially Harm Other Parties

38. The “other parties” in interest in this case are the Petitioning Creditors – all

lawyers who know how to protect their rights in bankruptcy court and other courts, some even

filing lawsuits against Baron. While these lawyers are claiming to be owed a substantial sum of

money, none can demonstrate that his or her constitutional rights have been or will be violated,

or that they will not have their day in court to adjudicate their claims without bankruptcy. And

Baron even agrees, as he had in the Lawsuit numerous times, that he is willing to pay all claims

that have been properly adjudicated through a trial.

39. Baron, on the other hand, has been deprived all of his assets for almost three

years, and many of his constitutional rights have been taken away with respect to his alleged

creditors. At the request of his creditors, a receiver was appointed to take control over all of

Baron’s assets, even exempt assets (like IRA plans and trusts with spendthrift clauses) that

creditors could not typically touch. When the Fifth Circuit reversed the receivership, the

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creditors maneuvered to continue the lock on Baron’s assets by filing an involuntary petition

only hours later. Since November 2010, with little or no assets available, Baron has not been

able to adequately defend him against the numerous allegations made by various parties,

including the Petitioning Creditors. (See, e.g., Exh. K.) As a result, Baron has been negatively

portrayed in the District Court, Bankruptcy Court and Fifth Circuit Court of Appeals and his

right to fair trials against non-judgment creditors has been sacrificed. This pattern will assuredly

continue if this involuntary bankruptcy is allowed to proceed and Baron is unable to hire

competent counsel.

40. It is clear that Baron upset a lot of lawyers who know their way around courts and

around arguments. There have been numerous claims made by the Petitioning Creditors that

Baron continuously hires and fires new attorneys as delay tactics. These assertions date back to

the original appointment of a Receiver and continued through the hearings leading up to the

Compromise Order. However, Baron had legitimate defenses to these claims in the state court

proceedings, and in the district court which were never fully or fairly litigated. Even assuming

one credits these asseertions, the Fifth Circuit unequivocally stated that a human receivership

was not the proper remedy, and creditors and the courts could and should rely on other remedies,

none of which included involuntary bankruptcy.

41. Given there were several lawful remedies suggested by the Fifth Circuit to

address Baron’s alleged vexatious behavior toward his former attorneys, the Petitioning Creditors

will not be prejudiced by the stay of the Order for Relief and the ability of Baron to have access

to his property.

(4) Public Interest Would be Served by Granting a Stay

42. Fundamentally, public interest will be served if a stay of the Order for Relief was

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entered because this involuntary bankruptcy appears to be geared solely toward circumventing

the Fifth Circuit’s Reversal Order. The Bankruptcy Court’s Order for Relief violates the

public policy expressed by the Fifth Circuit in Netsphere. An alleged debtor’s assets cannot

be frozen or tied up by a receiver based on mere claims of non-judgment creditors, including the

Petitioning Creditors. The Fifth Circuit ruled that the claims of the law firms (including the

Petitioning Creditors) violated fundamental principles that receiverships cannot be used to freeze

funds unless or until the debts are reduced to judgment. The Bankruptcy Code also recognizes

that nonjudgment creditors, or creditors’ whose claims are subject to bona fide dispute as to

liability or amount, cannot avail themselves of the involuntary bankruptcy remedy. See 11

U.S.C. § 303(b). The other public interest that assuredly will be undermined if a stay is not

granted is Baron’s due process rights to regain his property (which was wrongfully taken away)

and to contest the various allegations made by the Petitioning Creditors in a proper forum.

Instead, if no stay is granted, the bankruptcy will likely proceed with full steam ahead, just as the

Receivership proceeded, and Baron will be forced to participate with little or no help from

counsel. There is a very serious danger that he will be forced to waive many of his constitutional

rights, including the right to a trial by jury and the right to challenge state law claims in front of a

state court or Article III Judge, as prescribed by the Supreme Court in Stern v. Marshall, 131 S.

Ct. 2594 (2011).

43. Moreover, the public interest and judicial economy will be served if the stay on all

bankruptcy proceedings is imposed and Baron is allowed to hire professionals and counsel to

finalize the Lawsuit. The Fifth Circuit Court of Appeals in the Reversal Order appears to have

given Baron the tools (i.e., his property) to complete this task. The intervening involuntary

bankruptcy strips Baron of any right to manage any of his property, property exempt from the

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bankruptcy estate. The intervening bankruptcy has even resulted in an appointment of a trustee

which, like the Receiver, can again attempt to waive Baron’s constitutional rights with respect to

non-judgment creditors, as well as his rights to defend against claims in the underlying Lawsuit,

and can even try to waive his right to have privileged conversations with his counsel.

IV.

CONCLUSION

44. For the foregoing reasons, Baron requests that the Court enter a stay of the Order

for Relief pending the appeal of the same and to stay the appointment of an Interim Trustee.

Dated: July 15, 2013 Very respectfully,

The Cochell Law Firm, P.C.

By: /s/ Stephen R. Cochell

Stephen R. Cochell

Texas Bar No. 24044255

7026 Old Katy Rd., Ste 259

Houston, Texas 77024

(713)980-8796 (phone)

(713)980-1179 (facsimile)

srcochell@gmail.com

LBR 7001-1(b) CERTIFICATE OF CONFERENCE

On July 11, 2013, undersigned counsel contacted several parties in interest in this matter,

including John Litzler, Gerrit Pronske, Jeffrey Fine, John MacPete, Richard Roberson and Ray

Urbanik to discuss the motion and ascertain whether there will be opposition to Baron’s request

for stay. At the time of filing, this motion had no concurrence, and is therefore OPPOSED.

/s/ Stephen R. Cochell

Stephen R. Cochell

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CERTIFICATE OF SERVICE

On this date, I electronically submitted the foregoing document with the Bankruptcy

Clerk for the U.S. District Court, Northern District of Texas, using the electronic case filing

system of the court. I hereby certify that I have served all parties who receive notification

through the electronic filing system.

/s/ Stephen R. Cochell

Stephen R. Cochell

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