Ira and Linda Distenfield, who grew legal services firm We the People Forms & Service Centers into a national brand, have filed for Chapter 7 bankruptcy.
The Summerland residents listed $515,000 in assets and more than $5 million in liabilities.
The Distenfields sold We the People for $12 million and $2 million in stock in 2005 to publicly traded Dollar Financial Group, according to court filings. Legal wrangling broke out afterward over payment.
In an interview, Ira Distenfield said the couple filed for bankruptcy because it “became financially prohibitive” to keep up the legal fight over payment for We the People.
“After dealing with the litigation and related expenses for almost four years, we came to the decision that we needed to end that pain and move on,” Distenfield said.
Among listed assets is the couple’s stake in 20 PRstore franchises. Distenfield said he did not expect the bankruptcy to have any affect on the walk-in marketing services stores, including the Santa Barbara location.
One of the Distenfields’ largest creditors is Cappello & Noel, a Santa Barbara-based law firm. The Distenfields owed the firm about $130,000 in an arbitration agreement stemming from Cappello & Noel’s work on the litigation against Dollar Financial.
“We intend to prosecute whatever rights we have in bankruptcy court,” Barry Cappello, managing partner of Cappello & Noel, told the Business Times. “As a judgment creditor, we do have priority over unsecured creditors but not priority over secured creditors.”
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