The former clients of Erika Jayne’s husband Tom Girardi, who were screwed out of millions, are finally hearing some good news in court.
According to court documents obtained by Radar, the trustee presiding over Girardi’s involuntary bankruptcy is updating the court on his work.
As we first reported, the once-respected lawyer was forced into Chapter 7 by his creditors who accuse him of owing tens of millions.
Financial records show Girardi’s law firm has $101 million owed in liabilities. Girardi, who was once a powerhouse Los Angeles attorney, is accused of running his law firm like a Ponzi scheme for over a decade.
The trustee claims Girardi screwed over his clients but failing to pay them millions owed on settlements. Jayne’s husband owes $2 million to a group of orphans and widows who lost their loved ones in a plane crash and another $11 million to a fire burn victim.
As part of the bankruptcy, Jayne is being sued for the return of $25 million. The trustee claims Girardi’s law firm used company money to pay the bills for Jayne’s company EJ Global for over a decade.
The bank statements show $14 million being spent on her American Express alone. In the newly filed documents, the trustee, who is trying to sell off property to raise money for the victims, says he needs to use cash because he reached deals with Girardi’s secured creditors.
The trustee says at the time of the involuntary petition, Girardi’s affairs were in “dire straits.” At the time, all of his employees and attorneys had resigned or moved on. Most of the legal cases Girardi was handling before the bankruptcy are still pending or the client already dropped him. The trustee says he believes there is a lot of money to collect from former clients and old cases.
A couple of months back, the judge signed off on some of Girardi’s cases being transferred to another law firm.
The deal is the new firm will still pay Girardi a cut of any money pulled in. In the report, the trustee says one of the lawsuits involved a massive lawsuit over a Southern California gas leak. SoCalGas recently announced they would pay a $1.8 billion settlement.
Girardi had represented 23% of the plaintiffs. The trustee says he believes this settlement will “eventually result in a significant recovery for the Estate.” It could bring in tens of millions to the estate.
The report also notes Girardi owned two office buildings for his law firm. One has been sold off and the other is for sale. The trustee says he regularly visits the office to try and pull records. However, he notes the office was “difficult to navigate, disorganized, and holds a large volume of documents.”
He says he needs the court to approve him spending money to continue paying for Girardi’s “cloud” server where all the client files are stored.
The docs reveal Girardi’s former employees have had to be paid to help navigate the systems. The judge presiding over the case previously approved a budget of $166k-$276k for the trustee to spend.
“The trustee continues to diligently work to identify assets of the debtor and this process is ongoing. Without continuing access to funds, the Trustee is unable to fund a proper investigation of the Debtor’s affairs and to preserve and maximize the value of the Estate.” At the moment, the trustee has $4.2 million in cash on hand.
The judge has yet to sign off on the trustee using the cash.
For her part, Jayne is preparing her defense to the $25 million lawsuit filed against her.