Spending More Capital On The Capitol

I really should start practising law again full-time again. There is so much work on the messes alone that the City is involved in (and will be involved in) that lawyers here are going to be very, very wealthy.

And the rates are good too with the bottomless pockets of taxpayers footing the bills.

Our latest extravaganza is the Capitol theatre. We learned today in the Star:

• "On Thursday the city withdrew its offer to pay off creditors to the Capitol Theatre on the condition that the land and building become city property. Instead, city officials plan to file a statement of claim for the land and the building today in Superior Court.
  
  “We made the offer to pay off creditors so that we could act quickly,” Mayor Eddie Francis said Thursday. “But we’re not acting quickly. We can’t go on any longer, so we’re moving to enforce our security.”

Whaaaaaat? If the City's interest is secured, why does it have to pay off unsecured creditors? That was not in my Bankruptcy Law notes when I went to Law School.

Then we read:

• "William Willis, a lawyer with the McTague law firm acting on behalf of the city, said he’s confident that he can argue that the city now owns the Capitol.
  
  Willis said the city’s case is two-pronged. First, he says, the $1.83 million was a loan. Second, a Capitol operating agreement outlines that the 87-year-old playhouse would revert to the city if the theatre ever ceased operations or became insolvent.
  
  “We believe we have a strong case,” he said. “The reason we’re filing the claim now as opposed to when the Capitol went bankrupt is not because we thought we wouldn’t win. It’s just that if we could have resolved this without going to court it would have saved the city money.”

Whaaaaaat? If the City owns the Theatre now, why would it have to go to Court in the first place?

Obviously, there is an issue as to whether the City has a security interest as I have written here before. I wonder what the City's lawyers told them that BEFORE the bankruptcy of the Capitol.

In the spirit of saving taxpayer dollars, I am posing some questions for the City's lawyer to answer. It might help him figure out if he has a case or not:

• is there a registered mortgage or other security document. If not, is the City merely an unsecured creditor?
  
• how much is outstanding on the loan. If $0, does the City have a position


• did the "loan" ever require money to be paid back?


• is the "operating agreement" a mere contract and has no validity as security in a bankruptcy?


• why didn't the City take it over when the Capitol first became insolvent so that we would not have this mess and they had the contractual right to do so


• is the reason the City did not act because the City was afraid to pay severance to a few employees so now it will have to pay the same amount and more to lawyers to fight this battle with no guarantee of winning!

This is taking on the appearance of another fine mess we have gotten into. More lack of foresight that costs taxpayers money. Oh and threats do not work against a Trustee in Bankruptcy, an officer of the Court! The Trustee could be sued if it gave up the theatre merely because the City paid off a few debts.

Now of course I have THE solution that works for everyone. But heck, if everyone else is going to be making a ton of money from City taxpayers, I may as well too. But I'll do everyone a favour. I'll charge out as a consultant and not as a lawyer!