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Jeff Palfini
Pro Se
516 Church St.
San Francisco, California 94114
Phone: (415) 378-0995 

 
United States Bankruptcy Court
Northern District of California
San Francisco Division 

In re: 
Standard Media International, a Delaware Corp.,
Aka The Industry Standard and thestandard.com,
Fka Industry Standard Communications, Inc. and
Internet Industry Publishing Inc.
Debtor. 


Case No. 01-32214-TC
Chapter 11 


In response to the Omnibus Objection to Certain Claims Arising
From Employee Termination Agreements filed on Dec. 3, 2004. 


I am writing in response to the Omnibus Objection to Claims filed by the law firm of Sheppard, Mullin, Richter & Hampton, LLP representing the Official Unsecured Creditors Committee. 

Being that my claim is small, and I am of modest means, I cannot afford to retain counsel for this proceeding. I will be representing myself. 

As such, I take issue with the aforementioned firm’s objection and their call for dismissal of my claim, Claim #1 in the proceeding, filed September 4, 2001. I ask that the objection, at least as it pertains to my claim, be dismissed, as the argument put forth by the firm lacks merit. 

I respond to their grounds for objection to my claim as such: 

1) Their objection begins by establishing the Petition Date, Debtor, Bankruptcy Code and Claims Bar Date – none of which I take issue with. 

2) Then they state that the Committee has reviewed a number of claims and found some (the 13 listed in their document, including my own) to be based on termination agreements signed on the day of the claimant’s departure from employment with the Debtor, agreements they believe to be lacking in consideration. This overarching argument I plan to address in detail later in this document. 

3) The Committee cites 11 U.S.C. 548(a)(1)(B) and puts forth that the claims in question are avoidable as fraudulent transfers and should be disallowed. The Committee also points to Bankruptcy Code section 502(d) saying that a claim based on an avoidable transfer must be disallowed. This argument is flawed in that there is no basis for my claim to be seen as a fraudulent transfer. In fact, there is no evidence to suggest that the severance agreement was construed to defraud potential creditors pending the Debtor filing for Chapter 11 protection. The circumstances rather suggest that Human Resources and my superiors at Standard Media International did not believe the company would be filing for bankruptcy, especially not 17 days after my departure. Very few people were laid off on or around the date of my departure, and the decision as to who was laid off seemed to be based on nothing more than whom the company believed it could let go to trim its costs and still conduct its business at a high-quality level. I received a very modest sum of money -- $2,134.62 – as part of a severance agreement signed by myself, The Claimant, and by The Debtor on August 10, 2004. I was promised this sum in installments. If The Debtor was attempting to defraud creditors, I would argue that they would not have stretched the payment of my severance into installments. If I had been paid my severance as is customary, by check on the day of departure from employ, then I would not have had reason to file a claim in this case in the first place. I would also point out that the amount of my severance, while termed ‘lucrative’ by the Committee is in actuality quite modest and showed fiscal restraint and responsibility on the part of the Debtor. The Debtor was in fact doing what it could to attract a renewed investment from its parent company or an offer from an outside investor or investors to buy the company from its current investors. From what I heard as an employee at Standard Media International, everyone up to the CEO believed until the very end that IDG, Standard Media International’s parent and largest investor would renew its investment in what had been the most profitable of its businesses. 

4) Their argument also hinges on the idea that the severance packages were avoidable and also that Standard Media International received ‘less than a reasonably equivalent value’ for the money they agreed to pay out in severance. They say that the ‘waiver of claims’ inherent in the severance agreement were of no value to Standard Media International being that they would file for bankruptcy 17 days later. They go on to state that the employees in question – being at-will employees – could not file a claim (of any kind that would warrant a severance) against their employer -- something that strikes me as patently untrue. Furthermore, as I postulated before, the decision-makers at Standard Media International as regards my severance had no foreknowledge that the company would be forced to file for bankruptcy protection weeks later.  

5) The next point in the Creditors Committee’s argument is that the range of size of the severance packages show a lack of consideration for finding reasonably equivalent value. Here I would argue two points: a) That the employees in question signed their severance agreements at different points over a five-month period during which the company’s standing changed considerably. Also, the lengths of employment varied greatly as did their level of commitment – some having uprooted their lives and moved to other countries to help Standard Media International expand its presence internationally. There were also varying levels of responsibility. b) My severance package is the smallest of the 13 contested claims and included, I suspect, to both illustrate what the Committee sees as an unreasonable disparity between the packages and also in hopes that those of us with smaller claims might let them drop rather than get counsel or prepare a response to their objection. In any case, my severance (likely to amount to about $1,250 from what I understand to be the likely payout rate) will not ‘harm innocent creditors’ as they argue; nor is it a ‘lucrative severance package’ as they state. Nor is there a ‘significant disparity between the value received and the obligation assumed’. Twenty-one hundred dollars in San Francisco is a modest severance payment by any measure. Whether the scale of the larger severances is one that has merit or is fair to the creditors is immaterial to my particular case. 

In closing, I would also like to note that while Shepard, Mullin, Richter & Hampton have had more than three years to prepare their case, I was given less than a month, during the holiday season no less, to make heads or tails of this objection, decide whether I should, or even could, retain counsel and then come up with a counter to the objection.

I look forward to attending the hearing on January 3rd and arguing my case. I feel that the Unsecured Creditors Committee is unfairly targeting former employees who deserved to receive their severances in a timely manner – three and a half years ago.  


Respectfully Submitted, 


Jeff Palfini
Pro Se