Off-topic but fun: Tesla shareholders prevail against Musk $55 billion bonus.

I mentioned a few times to my UWLA Business Assns students last semester that there was a pending derivative lawsuit by some Tesla shareholders against Elon Musk that went to trial in Oct 2022 but no decision to date.  Well the decision came down yesterday and it was against Elon Musk. 

I really expected it to go the other way.  The 201 page decision is here.  As we learned, it is a duty of loyalty and care issue as to Musk since something is going from the corp into his pocket (a lot of stock), and a duty of care issue as to the rest of the board.  As to loyalty, the transfer to him is presumed to be unfair to the corp unless he did not participate in making the decision.  He argued that he did not and further, the bonus program was approved in advance by disinterested directors as well as disinterested shareholders.  Based on that, he argued that it was the unhappy shareholders’ burden to establish that the transaction was not fair to Tesla.  

The court, after taking testimony for five days, and considering 1700 exhibits, (and reading a few Musk biographies I think) found that the directors were not disinterested, and the shareholders were misled, at least enough to diminish the consequences of the vote, and therefore it was Musk’s burden to establish fairness which he did not do.  

I’ve just started working my way through the decision.  I’m going to prepare a case summary which I will upload which it is complete.       

Examining Student Loan Discharge: Nuts and Bolts Overview & Training on DOJ Guidance

cdcbaa Webinar

Saturday, February 24, 2024

11:00am – 1:00pm


  • Hon. Vincent Zurzolo | Judge, Central District of California, Los Angeles Division
  • Elan Levey | Assistant United States Attorney, United States Attorney’s Office – Central District of California
  • John Rao | National Consumer Law Center
  • Raychelle Tasher | Assistant United States Attorney, United States Attorney’s Office – Southern District of Florida
  • Hon. Magdalena Reyes Bordeaux | Judge, Central District of California, Riverside Division | Moderator

Register here.

Where have you been Hayes?

Good grief, I see that my last post was in December 2021. Since then there has been a lot of water under the bridge, or over the dam if you prefer. In early January 2022 I accepted a position as BAP Law Clerk to Judge Laura Taylor, then in San Diego, now retired. I quickly sold my practice to my partner Matt Resnik and began my new job on February 15, 2022. Since Judge Taylor’s term on the BAP was to end on December 31, 2022, I assumed and announced that I was taking a sabbatical for the remainder of the year expecting to return in early 2023. During that time, I became acquainted with Judge William Lafferty in Oakland, also a member of the BAP. Since his BAP clerk was retiring in April 2023, we agreed that I would become his BAP clerk on May 1, 2023. Nearing the end of 2023, I decided that a two year sabbatical was enough and advised Judge Lafferty that I wanted to return to civilian life and my consumer bankruptcy practice and he was graciously fine with that.

As a law clerk to a bankruptcy judge I was no longer free to opine on the great questions of the day as there was always some risk that someone would equate my opinions with the opinions of the judge I was working for so I stopped posting things on this list serve. I wrote only one article during that time, Demystifying Bankruptcy Appeals for the Los Angeles Times. It’s pretty good. I asked for Judge Taylor’s okay which was quickly given. She commented that the article was “breezy and very informative.” I was quite delighted with the comment.

The experience was a once in a lifetime deal. Most lawyers who clerk for judges do so early in their career. I waited 42 years to get a clerking job. My appreciation for the efforts of the judges increased many fold. I will speak more about it as things come up.

In the meantime, I have forgotten how WordPress works so please forgive my writing gaffs. I’m looking forward to rejoining the internet voices and hearing from you.

Subchapter V debt limit is set to decrease March 28, 2022

From the California Lawyers Assn – Insolvency Law Committee
REMINDER: On March 28, 2022, certain provisions in the CARES Act expire. Importantly for insolvency practitioners, the amount of eligible debt permissible for a debtor to file under subchapter V decreases from $7,500,000 back to the original amount of $2,725,625. It is uncertain whether Congress will extend this provision before it expires.

San Fernando Valley Bar Association – Bankruptcy Section program Friday, 12/10 at noon

Email from Steve Fox:

Dear All:

We have a really meaty program that the panelists will deliver with high energy.  The panel will look at recent C.D. U.S. District Court opinions discussing bankruptcy issues.  You may not want to deal with the district court but that court issues a lot of bankruptcy opinions that all of us need to know of.   The panel will be led by Roksana Moradi-Brovia who along with Eliza Ghanooni and Tamar Terzian, will make up the panel.  The materials are thick and good. 

Here are the particulars:

            Date:              Friday December 10, 2021

            Time:              12 noon to 1:15 give or take

            Place:             Via Zoom

            MCLE:             1.25 hours – Specialization credit available for this program

            Charges:        $20 to members of the SFVBA

                                    $30 to non-members of the SFVBA

            Lunch:            As tasty as you make it!

            To register:    1.         Sign up at

                                    2.         Call (818) 227-0495 and ask for help to register

If you do not want to receive periodic emails from me announcing SFVBA programs, just reply and let me know.


Steven R. Fox

The Fox Law Corporation

UWLA Newsletter

With a nice little bio of my friend and colleague David Chaney. You can access it here.

Are findings of fact and conclusions of law required? Answer, sort of.

Nice quote from a district court memorandum I am reading.

Appellant does argue that the Bankruptcy Court was required to render findings of fact and conclusions of
law as required by Federal Rule of Civil Procedure 52(a), citing Rediger Investment Corporation v. H
Granados Communications, Inc. (In re H Granados Communications, Inc.)
, 503 B.R. 726, 732 (B.A.P. 9th
Cir. 2013). But that authority itself demonstrates that “[w]here the bankruptcy court rules without
articulating its findings, . . . there is no reversible error where the record provides the reviewing court with
a full, complete, and clear view of the issues on appeal” and that a “[r]eview of the record suffices when it
contains clear references to the factual basis supporting the bankruptcy court’s ultimate conclusions.” Id. at
732-33. This is the case here. This Court has no difficulty in understanding why the Bankruptcy Court
ruled in the way it did. As such, any failure by the Bankruptcy Court to follow the dictates of Rule 52(a) is
not reversible error.

Good News – UWLA 2021 California Accredited Law School Annual Compliance Report

Email from Dean Jay Frykberg, Dean and Provost, University of West Los Angeles School of law

UWLA 2021 California Accredited Law school Annual Compliance Report


I can report that UWLA has successfully submitted our 2021 annual CBE report. This report was dramatically different and much larger than any previous annual report due to changes from staff at the CBE (ie. student/faculty demographics, further disaggregated data based upon campus location and program, etc.) in fact this report was almost three times the size of previous annual reports and consisted of 33 files and 916 pages all of which was completed in only 23 days. This is also our first fully digital report that is accessible on UWLA’s share drive, that ensures that next year’s process will be even more efficient.

Thank you to each of you who contributed, especially to those that submitted print ready documents as requested, and an extra special and deeply appreciated thank you to Patty and Jesse both of whom were indispensable in the completion of this project. Not only did they complete their sections, but they also assisted in completing many more.


Response from President Robert Brown

Dean Frykberg, I would like to also extend my heartiest appreciation for the work completed by your team. I wish to note that your team submitted the report well  in advance of the requisite deadline. I also want to express my appreciation for the extraordinary efforts of Jesse Aldava and Patty White. Job well done.  Your contributions are recognized and appreciated. As you know this report is not only no small feat to prepare but it means everything in terms of our state bar accreditation and our relationship with the California Bar. Congrats!

I also want to salute Dean Frykberg for being named the Chair of the State Bar rules committee. What a fantastic and well-deserved honor. You mean that someone from UWLA is considered an “insider”? lol Thanks jay for your fabulous and ongoing leadership. You are an example for all of us to aspire to emulate. Will you please join me in saluting Jay and his team for their outstanding efforts and achievements?

Robert Brown

Short explanation of bankruptcy alternatives

This is an email I sent to a prospective client a few months ago.  A succinct explanation of bankruptcy alternatives.

Dear Joe,

Your choices for bankruptcy are chapter 7 and chapter 11.  Neither you nor any of the corps qualify for chapter 13.  

Chapter 7 is a liquidation.  A trustee is appointed.  He/she sells everything you own that has equity and is not exempt.  You have no choice in it.  The trustee owns everything you own instantaneously and sells it – if of course he can find a buyer.  If he can’t find a buyer or there is no equity or it is exempt, he will “abandon” it back to you.  

In a personal case, i.e., you as an individual, “everything you own” includes all community property.  The trustee will sell it irrespective of your wife’s interests.  The trustee cannot sell your wife’s separate property.  

In chapter 7, all your debts are discharged – wiped out – with a few exceptions like child and spousal support, most taxes, fraud.  Your wife’s debts will not be wiped out in your bankruptcy but that does not mean she is liable for your debts.  She is only liable for debts she promised the creditor she would pay.  For example, I saw that she signed for some the [bank debt].  Her obligation to pay that would not go away in your bankruptcy (unless you stay married and then it sort of goes away).  Likewise any deal you make with your wife in family court to pay the debts she owes is not binding on the creditor.  

So in chapter 7, the trustee would sell your home – and give you the $600,000 exemption.  He would sell your interest in [your corp].     

corporate chapter 7 works the same way with one big exception – the corporation/LLC does not get a discharge.  When the case is over, the corp still owes whatever it owed when the case started.  Corps don’t file chapter 7 very often.  There may be other reasons to file – other than getting a discharge. 

If [your corp] files chapter 7, the trustee would control the litigation against [the bank].  The trustee might actually litigate it, i.e., hire a lawyer on a contingency – even your lawyer if he will do it on a contingency.  It is more likely though that the trustee will try to settle it with [the bank].  The trustee might think it’s too much hassle and just close the chapter 7 case which would mean it is your asset again to proceed with.  That would only happen if [the bank] refused to pay even $10-15-20,000 to settle.   

Chapter 11 is a reorganization.  There is no trustee.  You personally function as the trustee.  You keep all of your property, you continue to operate your business with bankruptcy court oversight.  

You file a plan of reorganization.  The creditors get to vote on the plan, i.e., accept or reject it.  The court can approve the plan, even if almost everyone rejects it.  That is called the cram down powers of the court.  

The most fundamental part of the plan is that you have to pay your creditors at least as much as they would get in a liquidation.  So you would have to value [your corp] at some amount, and the litigation against [xyz] and the equity in your home after the homestead exemption, and then pay that amount to your creditors over five years – up to 100% of the total debts.    

A corporate chapter 11 works basically the same way.  You propose a plan to pay creditors what they would get in a liquidation.  If [your corp] files chapter 11, you would remain in control of the litigation with [the bank] but the plan would probably say you will pay the proceeds of the litigation to [your corp’s] creditors, up to payment of all creditors in full.  

Let me know what you think.  Jon   

18th Annual Bankruptcy Ethics Symposium – Friday, November 19, 2021 (3.5 hours ethics)

The Federal Bar Association (LA Chapter) is hosting its 18th Annual Bankruptcy Ethics Symposium on Friday, November 19, 2021.  The format this year is online/webinar only.

Click here to register online (November 19, 2021)

Click here for the event flyer (pdf).

Federal Bar Association-Los Angeles Chapter’s 18th Annual Bankruptcy Ethics Symposium

Friday, November 19, 2021

Time: 9:00 a.m. to 12:30 p.m.

Online / Webinar

3.5 hours of ethics CLE


  • Honorable Sandra R. Klein, U.S. Bankruptcy Court, Central District of California
  • Honorable Barry Russell, U.S. Bankruptcy Court, Central District of California
  • Honorable Martin R. Barash, U.S. Bankruptcy Court, Central District of California
  • John Hermann, Chief Deputy of Administration
  • Ron Maroko, Office of the United States Trustee
  • Misty Perry Isaacson, Pagter and Perry Isaacson, APLC
  • J. Scott Bovitz, Bovitz & Spitzer
  • John N. Tedford, IV, Danning, Gill, Israel & Krasnoff, LLP

Program Chair: Joseph Boufadel, Salvato Boufadel LLP


  1. Leaving Your Attorney Legacy:  Ethical Consideration in Mentoring and Succession Planning  
  2. Technical Competency and Ethical Pratfalls: “I am Not a Cat” and Much More
  3. Brave New World: Ethical and Practical Considerations in Conducting Remote Hearings and Trials

MCLE: 3.5 Hours Legal Ethics. This activity has been approved for Minimum Continuing Legal Education Credit by the State Bar of California. The FBA certifies that this activity conforms to the standards of approved education activities prescribed by the rules and regulations of the State Bar of California governing minimum continuing legal education.

Thank you.

Joseph Boufadel

Salvato Boufadel LLP