1
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”)
Case 12-37921-sgj7 Doc 297 Filed 07/19/13 Entered 07/19/13 15:57:38 Page 1 of 6
2
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
th
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
Case 12-37921-sgj7 Doc 297 Filed 07/19/13 Entered 07/19/13 15:57:38 Page 2 of 6
3
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
Case 12-37921-sgj7 Doc 297 Filed 07/19/13 Entered 07/19/13 15:57:38 Page 3 of 6
4
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
Case 12-37921-sgj7 Doc 297 Filed 07/19/13 Entered 07/19/13 15:57:38 Page 4 of 6
5
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.
Case 12-37921-sgj7 Doc 297 Filed 07/19/13 Entered 07/19/13 15:57:38 Page 5 of 6
6
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
Case 12-37921-sgj7 Doc 297 Filed 07/19/13 Entered 07/19/13 15:57:38 Page 6 of 6
