The U.S. federal involuntary-bankruptcy filed against alleged poker cheat Mike Postle by Veronica Brill and Todd Witteles has been dismissed by Brill and Witteles following a series of negotiations and discussions between the parties and their attorneys covering the past two months. The agreement for Brill and Witteles was reached in mid-December and signed by all attorneys for the parties, including Brill counsel Marc Randazza and Witteles counsel, Eric Bensamochan, along with Yasha Rahimzadeh, a Sacramento-based bankruptcy attorney now representing Postle in the matter.
The involuntary-bankruptcy petition was voluntarily dismissed and a confidential settlement was reached in exchange for Brill and Witteles dropping their petition against Postle. The terms of the settlement remain publicly unknown. Brill and Witteles were jointly owed roughly $55,000 in court fees awarded to them following Postle’s own voluntary dismissal in April 2021 of a $330 million defamation lawsuit. Brill and Witteles were two of 12 relatively high-profile — and largely deep-pocketed — defendants named in Postle’s claim.
Brill and Witteles filed the involuntary-bankruptcy petition to recover those court fees in July 2021 after three months of noncommunication from Postle regarding his payment of the court-ordered debt. Postle responded by filing to dismiss the involuntary-bankruptcy petition in September, though that effort was rejected a month later. Meanwhile, Postle filed documents asserting over $270,000 in debt, largely in claimed credit-card accounts.
Numerosity dispute loomed over scheduled bankruptcy trial
A scheduled trial for Postle’s involuntary bankruptcy had been set for mid-December, though it would almost certainly have been delayed. A major issue that went unresolved was a “numerosity” claim filed by Postle under which he sought to have the involuntary-bankruptcy petition declared invalid. As part of his defense, Postle claimed that he had more than 12 creditors, and the numerosity clause in federal bankruptcy code meant that at least three of his creditors had to initiate the involuntary petition, should Postle’s claim under that clause be upheld.
Brill and Witteles amounted to only two such creditors, though their attorneys quickly questioned whether some of Postle’s listed debts were accurate as claimed, while also alleging shortcomings in the documents as filed by Postle. The entire matter remained unresolved when the two sides reached the agreement just a week or two later that resulted in the petition’s dismissal.
Settlement’s terms reached to save ‘further time and expense’
Though the settlement agreement was reached in principle in mid-December, it was not docketed until Friday, January 7, 2022. Part of the delay was due to Postle himself not signing the agreement until December 27. The key clauses in the agreement are as follows:
WHEREAS, in order to avoid further time and expense, the Parties have decided to resolve their differences and reach an end, compromise, and settlement of all disputes now and potentially existing between them in this Involuntary Bankruptcy; and
WHEREAS, the Parties have entered into a confidential settlement agreement that resolves their differences in this Case.
Though filed and docketed, the settlement will remain unofficial until formally approved by the case’s presiding judge. A court hearing at which Brill’s and Witteles’ motion to dismiss their petition against Postle will be considered has been scheduled for February 9, 2022. The settlement specifically applies only to the battle over the involuntary-bankruptcy petition and does not mean that a separate settlement has been reached regarding the legal fees still awarded to Brill and Witteles last year, which likely remain outstanding.