• by Steve McClellan , December 1, 2014

Kal Liebowitz, the founder of KSL Media, has filed for personal bankruptcy. The filing comes a little more than a year after the firm shut its doors — its bankruptcy petition now winding its way through the liquidation stage known as Chapter 7.

The former media agency head said in his filing that he has been a consultant and semi-retired for the past year. He is claiming assets of a little more than $5 million and liabilities of more than $4.85 million.

But Liebowitz has filed a Chapter 7 liquidation claim, asserting that he does not have the ability to pay off his creditors, which include KSL, from which he borrowed $3 million between 2000 and 2011; the holders of two mortgages against his California home valued at about $1.6 million; some $80,000 in back taxes and $30,000 in spousal support, as well as a $48,000 loan from his son Keith. Unpaid legal fees are estimated at $156,000. He is also behind in his payments to the North Ranch Country Club and has listed the club as an unsecured creditor that is owed nearly $6,000.

Also listed as a creditor is Sweet ‘N Low marketer Cumberland Packing Corporation, a former KSL client. Liebowitz listed the amount of that claim as “unknown” but stated that it’s tied to claims from the KSL bankruptcy case. Cumberland and KSL had a falling out, allegedly over ad dollars that the client paid to KSL that were not properly placed. The companies agreed to a settlement that has been challenged by KSL Trustee David Gottlieb.

Earlier this year Gottlieb told the U.S. Bankruptcy Court hearing the case that the settlement amounted to what he termed a “fraudulent transfer” that should not have occurred and that is legally voidable.

Cumberland and an affiliate received nearly $10 million under the settlement, according to Gottlieb’s filing. Earlier court filings suggested that Liebowitz and former KSL CEO Hank Cohen were apparent “beneficiaries” of the deal, receiving separate payments for agreeing to the settlement.

Given the fraudulent nature of the transaction, and the fact that payments were made within 100 days of KSL’s Chapter 11 filing, the trustee said, KSL is entitled to recover the money. He has asked that the settlement be voided and that Cumberland and its affiliate, JEM Partners, be ordered by the court to return the money to the KSL estate.

According to Gottlieb, Liebowitz and Cohen might be on the hook for the payments. Both former KSL executives signed “negative covenants” assuming responsibility for the payments to Cumberland and JEM if KSL didn’t complete the payments. 

Cumberland in turn has told the Court that if the settlement is voided, KSL could owe it as much as $96 million.

Gottlieb as Trustee for KSL is also listed as a creditor in Liebowitz’s personal bankruptcy filing for a claim for which the total is “unknown.” The Trustee has been pouring over records for months looking for property that might be returned to the KSL Estate for redistribution to creditors.

In addition to his Thousand Oaks, CA home, valued at $1.6 million, Liebowitz lists an IRA valued $3.4 million as an asset. He contends that both are “exempt” and not subject to possible seizure. Also claimed as an exempt asset: half-ownership in a horse.  Known for his interest in horse racing, Liebowitz also reported selling interests in a number of horses in his bankruptcy petition.

Personal property  items include “claims for fraud and embezzlement against Geoff Charness relating to KSL Media Inc.” KSL Media claimed that Charness stole millions from the company and was partly responsible for the firm’s financial woes.

Apparently, Liebowitz’s consulting business has not been that lucrative. He listed current monthly income up to October of $3,100, all of it coming from Social Security. But starting in November Liebowitz began receiving a hefty increase — $20,000 a month in disbursements from the $3.4 million IRA. He lists monthly expenses at more than $28,000, including mortgage, alimony, taxes, pool and pest services and other costs.

Through Oct. 21 of this year, Liebowitz also received $153,665 from barter trading company EWorld Asset Trading, a firm that he owns 100% of that is currently being dissolved. He also collected $9,250 in unemployment benefits.