J. David Trustee Ordered to Meet Creditors Monthly

Amid verbal joustings between J. David & Co. bankruptcy trustee Louis Metzger and members of the failed firm’s creditors committee, U.S. District Judge J. Lawrence Irving on Wednesday ordered both sides to meet monthly and exchange information about the disposition of J. David assets.

Hurling barbs at Metzger for not involving them in key decisions affecting the estate, members of the creditors committee presented Irving with six pages of complaints at a hearing in Irving’s chambers.

The tension-packed meeting occurred one year to the day after a group of disgruntled investors forced J. David & Co. into bankruptcy.

“The creditors committee has an absolute right to have advance notice” of various bankruptcy proceedings, said Richard C. Wildman Jr., the committee’s attorney, including settlements involving the sale of J. David assets.

The committee also protested that it has not received “adequate and timely” information from Metzger and that it gets information about the same time as the news media do.

A visibly upset Metzger told Irving that the committee’s “problem is with a perception . . . as to what their duties are. Their questions upset me.”

A creditors committee in a Chapter 7 bankruptcy liquidation, such as J. David, typically has little more than an advisory role.

J. David creditors, however, are “emotionally involved” investors, Metzger said. “They think they will put their hand on the tiller and steer.”

Metzger said there could be a “potential conflict of interest” between the estate and some members of the creditors committee who may later become plaintiffs against the trustee.

As an example, he said that committee chairwoman Jackie Zucker was in arrears for repaying her J. David preference payment, funds distributed to investors during the 90 days prior to the Feb. 13, 1984, bankruptcy filing.

(Federal law requires that those funds be returned to the estate. Metzger is preparing to sue those who have refused to do so.)

An angry Zucker snapped that she is “only a few days” behind in her payments, and promised Metzger that “you’ll have your check” soon.

While admitting that, “of course we’re emotionally involved,” Zucker insisted that the committee has “acted professionally.”

The committee was elected May 8 at creditors meeting in a Balboa Park auditorium.

After refereeing nearly one hour of bickering on Wednesday, Irving told both Metzger and the committee that, while there “are conflicts, I’m interested in preventing them occurring in the future.”

Irving, who earlier in the meeting had praised Metzger’s efforts, told the trustee to inform the committee of his activities only “in general terms” at the monthly, out-of-court meetings.

U.S. Magistrate Harry R. McCue, who has been overseeing the various J. David asset settlements, will preside at the meetings.