Businessman Lou Pearlman is in the middle of a bankruptcy filing. At one time he was responsible for bringing together such noted acts as the Backstreet Boys. After many years that relationship has soured and several lawsuits have been filed by the band against Pearlman. Now, the band is seeking to remain on the list of creditors that are awaiting payment from Pearlman’s bankruptcy.
The Backstreet Boys claims stem from a series of lawsuits filed in 2007. The band claims that Pearlman owes them for promising to indemnify them from defending claims in New York and various other lawsuits. Pearlman’s trustee claims that the band does not have the proper documentation to prove that they are owed the money that they request. He believes that removing this claim will create a more accurate register of debts. However, counsel for the band believes that they have all the necessary documentation. In addition, their attorney points out that debts incurred by fraud cannot be discharged or removed in bankruptcy.
This case, though filed in Florida is an example of how the bankruptcy process works. Once a list of creditors is created, a trustee has the right to challenge any claims that are believed to be invalid. The bankruptcy court rules on the validity of the claims after both sides present evidence.
Those seeking bankruptcy get one chance to get things right. All alleged claims must be accurately reported and those that are reported in error should be removed. The right bankruptcy attorney will not only choose the right bankruptcy path for your debts but will also accurately lead you through the bankruptcy process.
Source: www.abajournal.com, “Backstreet Boys and bankruptcy trustee head for trial over $3.4 million,” Victoer Li, March 10, 2014.