Balboa Inn Case Produces Another Suit

The financial mess involving the bankrupt Balboa Inn partnership, headed by National Basketball Assn. stars Kareem Abdul-Jabbar and Ralph Sampson, produced another lawsuit Tuesday when a Huntington Beach management company sued a Laguna Hills bankruptcy lawyer over the handling of a proposed sale of the hotel.

John Glenn Mangun and his Merlin Management Ltd. accused Michael J. Bartlett of fraud, negligence and interference with business opportunities and business dealings by failing to seek approval of the U.S. Bankruptcy Court for the sale of the property in February.

The suit, filed in U.S. Bankruptcy Court in Santa Ana, seeks $28,500 in actual damages and $200,000 in punitive damages.

Merlin, hired by the failing partnership to find a buyer, came up with a company that offered $5.75 million. When a majority of the partners turned it down, he proposed a second package that the partners approved.

The suit claims that Bartlett, hired to handle a Chapter 11 reorganization, failed to present either proposal to the court for approval and that he acted on his own to convert the proceeding into a Chapter 7 liquidation, allowing a noteholder to foreclose on the hotel.

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