Creditors of the law firm run by admitted Ponzi schemer Scott Rothstein will soon be receiving recoveries on their claims following the bankruptcy judge’s signature yesterday on a confirmation order approving the firm’s liquidating Chapter 11 plan.
In April the trustee for the firm Rothstein Rosenfeldt Adler PA was dealt a defeat when the bankruptcy judge in Fort Lauderdale, Florida, refused to approve a disclosure statement explaining a prior version of the plan. Trustee Herbert Stettin modified the plan, winning support from the official creditors’ committee and the judge the second time around.
The changes forestalled a movement by dissident creditors for conversion of the Chapter 11 case to liquidation in Chapter 7.
The revised plan, filed in May, is centered around a $72.4 million settlement payment from TD Bank NA. In response to creditor objections, the payment is made in sooner and so-called third party releases were cut back. The committee selects the liquidating trustee, who is predicted in disclosure materials to pay unsecured creditors in full eventually.
Rothstein co-founded Rothstein Rosenfeldt. Creditors filed an involuntary Chapter 11 petition against the firm in Fort Lauderdale in November 2009. When the firm was formally taken into Chapter 11 later that month, Stettin, the previously appointed state court receiver, became the bankruptcy trustee.
Rothstein pleaded guilty in January 2010 and is serving a 50-year prison sentence.