Summary:
The Chapter 11 debtor, through its manager, Smith, brought several actions against insiders and "persons closely allied with those insiders" for recovery of prepetition transfers. During discovery against O'Haro, which was "plagued by unsubstantiated 'narrative' defenses", over the course of the case Smith filed two Motions to Compel against O'Haro. During her first deposition, O'Haro invoked her Fifth Amendmnet right against self-incrimination, as a criminal investigation related to this business was underway.
In response, a third Motion to Compel was filed, with the bankruptcy court eventually finding in May of 2022 that while her invocation of the Fifth Amendment was understandable and that no inferences were drawn against her, since O'Haro had by now been released from any subpoena in the criminal investigation, her continued discovery delays and failures justified the imposition of sanctions, ordering that O'Haro pay costs and attorneys fees and be subject to a second deposition.
During that second deposition, which was conducted by Zoom at the office of Devine, the former owner of the debtor, O'Haro not only persisted in refusing to respond to questions, but appears to have had off-camera assistance from Devine.
At the hearing on the third Motion to Compel, Smith sought as a further and ultimate sanction that a default judgment be entered against O'Haro. The bankruptcy court, finding that O'Haro's lack of answers and coaching from Devine justified the "discovery death sentence" and entered a default judgment against O'Haro.
Commentary:
At the risk that a comparison might perturb some with protective sensibilities for anyone in their "tribe", this case is not dissimilar from the sanction against Alex Jones for his discovery malfeasance.
To read a copy of the transcript, please see:
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