Whether or not alleged poker cheat and failed libel-suit litigant Mike Postle will ever be forced to pay the combined $55,000 in legal fees he owes former defendants Veronica Brill and Todd Witteles has become somewhat more doubtful after Brill and Witteles agreed to drop their own involuntary-bankruptcy petition against Postle. The California-based federal case wherein Brill and Witteles sought to have Postle declared bankrupt ran aground, seemingly, to the sheer number of unpaid debts Postle has accumulated in recent years.

The settlement, with Brill and Witteles on one side and Postle on the other, was agreed to in principle in mid-December by attorneys for the three parties, but it wasn’t filed into the formal case record until a few days ago. The settlement remains unofficial until by approved by the bankruptcy judge overseeing the matter. That formal approval will likely occur at the next hearing in the case, which will be held in February, and which will also likely result in the bankruptcy petition’s official dismissal.

While terms of the settlement were not disclosed — and they have been sealed according to a confidentiality agreement signed by all parties — the settlement applies only to the involuntary-bankruptcy petition. It does not apply to the still-active legal fees of more than $27,000 each that Postle owes to Brill and Witteles. “It was a confidential settlement of the involuntary bankruptcy, so this is the one thing I can’t discuss,” Witteles posted in a thread on PokerFraudAlert regarding the case. “Sorry. I will say that the entire situation hasn’t been settled — only the involuntary bankruptcy part.”

In a very minor, technical win for Brill and Witteles, Postle agreed to pay the $338 in court fees for the case that would otherwise have fallen upon Brill and Witteles to cover.

Numerosity issue complicated proceedings

One of the issues raised by Postle’s defense is a numerosity claim that applies to involuntary-bankruptcy petitions filed under federal law. Creditors such as Brill and Witteles can try to force a bad debtor into bankruptcy whenever reasonable attempts to collect have failed, as has happened here.

However, under federal law, a numerosity clause kicks in when the debtor can provide evidence of 12 or more significant creditors. The clause requires that at least three creditors be parties in the involuntary-bankruptcy petition, as a way of helping establish priority claims should the bankruptcy petition be granted and asset seizures begin.

Brill and Witteles were awarded legal fees separately, and were thus two creditors. Unknown at the time of filing, however, was the amount of other debt that Postle owed. When Postle filed his creditors’ list, it offered nearly 30 separate debts totaling more than $270,000. A significant percentage of the debts Postle listed were maxed-out credit-card accounts, though Postle excluded a car loan he’s managed to continue to make payments on despite seemingly having no visible income sources.

Whether or not all the debts Postle claimed were legitimate — or even accurate — remains unknown. It would have been a time-consuming, expensive process to determine whether several of the debts could have been declared invalid for the purposes of Postle’s defense. Though the settlement remains confidential, this numerosity problem is among the leading possible reasons as to why Brill’s and Witteles’ counsel chose to drop this specific petition. It doesn’t mean the the collection efforts targeting Postle are over; it means that Brill and Witteles and their attorneys need to regroup and try again.

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