You may have read in "What's up" posts about my former rep, Carol Chislovsky, who filed for bankruptcy last summer, swallowing up tens of thousands of dollars of money she was floating that belonged to  her artist's. At the time I was upset enough, but my legal advice was to  write it off. All of her assets in this "No Asset" case were swallowed up by her bank, who had secured loans. WE artists, who only had a contract with Carol that she was to pay us our percentage of money collected, were considered at the end of the line. That's what I did. I am now happily representing myself.

Recently a new issue came to light. As I was writing former clients, to create amendments taking Carol's name off of existing contracts, I discovered that there had been a stream of royalty checks going to Carol since 1996 that I was unaware of and from which I had never received my artist's fee. Carol's name was, unfortunately, on the contract as my agent and statements and checks went to her. This is a substantial sum compared to the check lost last summer.

It seems the bankruptcy lawyer and lawyer for the bank consider all or most of this money she owed to her artists their own. Unfortunately Carol pooled all her money into one account rather than holding her artist's money in a separate holding account "in trust" Now it is difficult to negotiate.

Even if I have to write off the last four years of royalties into the black hole of the bankrupcy case, I want Carol's name off my contract and all current and future money made payable to me. The lawyer for the publishing client is being cautious and doesn't want to sign over any checks to me without a signature by the bank, Carol's creditor, saying that the bank will forgo any other claim to this money.

So, it is the sole proprietor artist who is in the weaker position. Even though my contract with Carol said I was due statements and money that I never received. Aosl, my contract with the client, Paul Mirocha, c/o Carol Chislovsky, says that I may void my contract with carol by informing them in writing of this fact. This I did.

Is this past overdue money considered fraud? Or can Carol say, sorry,  it was just bad book keeping? If it is fraud, I don't think the bankruptcy discharges her from this debt.

Any strategic ideas?

Paul Mirocha

On 4/5/00 12:59:01 PM, Paul Mirocha wrote:
>You may have read in "What's
>up" posts about my former rep,
>Carol Chislovsky, who filed
>for bankruptcy last summer,
>swallowing up tens of
>thousands of dollars of money
>she was floating that belonged
>to  her artist's. At the time
>I was upset enough, but my
>legal advice was to  write it
>off.

Paul,

I am not sure that I agree with the legal advice you obtained.  Let me explain why.  On a couple of occasions, I have had design firms go bankrupt on us.  When I investigated , I found that their clients had paid them for my talents' illustrations. The design firms just never paid us.  In both instances I went after the clients directly. Although they were not happy about it, both clients eventually made full payment to me even though they had paid their design firm previously for the same work.  They did this because I pointed out to them that (as stated on our invoice) under the copyright law, they would be guilty of infringement for using our illustrations in the absence of our artist actually receiving payment.  

It seems to me that you should be able to use the same argument with your clients.  Maybe Daniel Abraham will care to comment on this.

JERRY RAPP
g e r a l d  &  c u l l e n  r a p p, I n c.  
http://www.theispot.com/rep/rapp
gerald@rappart.com
   

There are far too many unknowns here to offer more than sketchy observations: what, precisely, did the contract with Chislovsky say; what, precisely, were the terms of the contract(s) for the various rights transfers and the payments under them?  There are also bankruptcy issues as to whether any of Chislovsky's breaches of her pre-existing fiduciary duty to the artists (both as to her comingling of assets and her concealment of the royalty checks) can trump the secured contracts held by other creditors.  

Jerry Rapp's solution sounds excellent, but it was possible only because his invoices were drafted so as to make possible the leverage he employed.  Without knowing the terms of the Chislovsky agency contract and the client contracts/invoices involved, there is no way to know whether the same tactics would work in this instance.

What the facts as you have relayed them here suggest is that your earlier legal advice was inadequate, and that you need the assistance of someone skilled in bankruptcy law, who can: attempt to place you before, rather than after, the secured creditors; assess whether the earlier royalty payments are recoverable;  and compel the clients who are reluctant to change the names on their contracts and to pay you directly to do so. Bankruptcy law is a highly specialized area, and this case needs a specialist.  

__________________________
Daniel Abraham, Esq.

718-499-4006

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