Debtor Dispute: Fill & Download for Free

The Fair Debt Collection Practices Act (15 U.S.C. section 1692) allows the consumer 30 days from receipt of a collection letter to dispute the debt. If a timely dispute is made, the creditor can not report adversely to the credit reporting agencies. It also has an obligation to “verify” the debt. That is your opportunity to challenge the debt. (Don’t bother with phone calls—everything should be in writing.) If the dispute occurs beyond 30 days, the creditor has no obligation to verify or stop collection action. As to any debt, a consumer is always entitled to an accounting.

A great lesson I learned as a young lawyer.I represented a finance company in Bankruptcy Court seeking to have a debt declared non-dischargeable. The debtor had clearly (and admittedly) presented a false financial statement in procuring the loan. It was really a simple case but the Bankruptcy Judge was a ”Southern gentleman” and notoriously pro-debtor. The Judge ruled against me and the amount in dispute was insufficient to warrant an appeal. I loudly objected to the ruling, almost to the point of contempt.As my client and I left the courtroom, I was dejected. Then my client explained that she was thrilled! — not only because I had vigorously cross-examined the defendant but because I “stood up” to the Judge.LESSON: A client wants their lawyer to fight on their behalf.

First, a qualifer - I do not believe that Fletcher Asset Management itself (as a separate legal entity) has actually filed for bankruptcy. However, related entities have and this answer provides information disclosed in the bankruptcy case of Fletcher International, Ltd.As for the answer to your question, it depends upon the narrative that you believe. First, you can find an explanation provided by Fletcher International, Ltd. in the declaration of Floyd Saunders on 7/2/12 (a copy is available here: Fletcher First Day Declaration). In part, that declaration provides the following as an explanation:The Debtor is a "master fund" in a "master-feeder fund" structure known as the Fletcher Funds. A master-feeder fund, by definition and design, is comprised of multiple entities through which profits and losses flow in a predetermined way. Many of the financial instruments owned by the Debtor are long-term, illiquid investments, and the majority of the Debtor's assets arc complex financial positions, or litigation actions which have arisen from such positions, which require specialized technical knowledge and experience--or historical knowledge-in order to maximize value.The Debtor and its affiliates in the Fletcher Funds have been the target of a relentless legal assault as part or a coordinated scheme that has left two of its related funds in liquidation in the Cayman Islands, and now threatens to drag the Debtor itself into liquidation. After certain disgruntled investors successfully petitioned the Cayman Islands court for the appointment of joint provisional liquidators at one of the Debtor's feeder funds (as defined below, "FlAL"), the joint liquidators rushed aggressively to pursue the liquidation in rapid succession of other members of the Fletcher Fund family.FlAL's board of directors believes that entry of the order appointing the liquidators was done in error, and has sought an appeal of the Cayman court's order. Despite the fact that this appeal is pending, and that the liquidators ultimately may be found to have no authority to act on FIAL's behalf, the liquidators nonetheless have rushed to use their current appointment to take actions that can not be reversed- and that have and will continue to destroy value at the Debtor and its affiliated funds.Due to the nature of the Debtor's investments, it will take time, along with very specific knowledge and experience, to ensure that the Debtor's assets are liquidated in a manner that provides the maximum benefit to the Debtor' s creditors and shareholders. The liquidators have neither the time. nor the specific knowledge of the Debtor's assets, nor the specialized technical knowledge and experience necessary 10 liquidate the Debtor's assets in a manner that will maximize value. Indeed, the Debtor's current management team, along with its financial advisor, are uniquely suited as a result of their specialized technical knowledge and experience to carry out this process.The Debtor, faced squarely with the reality that the liquidators might soon be able to wind down the Debtor's operations, determined that chapter II was the only option to prevent tile destruction in value of its assets, to the detriment of all stakeholders, and cessation of its operations.A second alternative version of the story was subsequently offered by Richard J. Davis. who was appointed as a Chapter 11 Trustee for Fletcher International by the Southern District of New York bankruptcy court. His report is over 300 pages long (a copy without exhibits is available here: Fletcher Trustee Report), so this doesn't purport to be a complete summary of his findings or his position, but here's an excerpt from the report's introduction:The Debtor, Fletcher International, Ltd. (known as “FILB” – the “B” standing for “Bermuda”), was one of dozens of investment funds, investment vehicles, and investment managers created or owned by Alphonse Fletcher, Jr. (Almost all these entities have “Fletcher” in their names. Fletcher the individual is referred to as “AF.”) FILB was a “master fund” that was supposed to invest money from “feeder funds” in accordance with a well-thought-out and precisely-articulated strategy managed by an experienced, successful manager, AF, and his wholly-owned management company, Fletcher Asset Management (“FAM”). The reality was very different.FILB was a fund which on the date of its bankruptcy held only one asset of undisputed value – Helix stock – worth less than $8 million. What the Trustee’s investigation shows is that, with FAM as its investment manager, FILB did not make a single profitable investment after August 31, 2007, and none of its investments made since then came close to realizing the valuations FAM placed on those investments – indeed, many are now virtually worthless. What the investigation also shows is that FILB, its feeder funds, and their investors were victims of a fraud perpetrated by AF and others at FAM, which enabled them to divert investor funds for AF’s own benefit, aided or facilitated by those we normally think of as creating a line of protection against such fraud – administrators, valuation experts, and auditors. Among the facts obscured by the fraud was that FILB and its feeder funds likely were insolvent as early as 2008.The information set forth in this Disclosure Statement is a combination of facts learned by the Trustee in his investigation and opinions formed by the Trustee after consideration of those facts. At this point, it should be regarded solely as the Trustee’s opinions. The Soundview Debtors dispute those statements of fact and opinions in numerous respects, for the reasons set forth in a document their counsel has prepared that is attached as Exhibit K. Turner also disputes those statements of fact and opinions in numerous respects, for the reasons set forth in a document he prepared that is attached as Exhibit L. Some matters that appear to be facts in this Disclosure Statement may later be found to be matters of opinion.. . .The facts and opinions set forth in this Disclosure Statement may in material respects be disputed in later proceedings in this chapter 11 case or elsewhere, and have not yet been found to be true by any court, if they ever will be. There can be no assurance that any litigation brought by the Trustee will be successful.