Chapter 7 trustee Randy Osherow filed the motion to dismiss the liquidation case on grounds that Van Gundy has failed to comply with her obligations under the bankruptcy code.
Van Gundy did not appear at a creditors meeting conducted by telephone Thursday. Such meetings allow the trustee and creditors to question a debtor.
James Wilkins, Van Gundy’s bankruptcy lawyer, told Osherow as the meeting began that Van Gundy had been advised by her physician not to attend.
“The doctor says she can’t testify right now,” Wilkins said.
Van Gundy has said she sustained a brain injury late last year after falling and hitting her head on a concrete table at her home. She didn’t know what caused the fall, but said it has caused memory problems.
The New Braunfels businesswoman has boasted that she earned more than $10 million buying manufactured homes on the cheap, fixing them up and flipping them. She’s been a guest on numerous podcasts and other programs to tout her investing prowess.
But some who invested with her expecting big returns allege she reneged on principal and interest payments on the loans they made. They say she orchestrated a Ponzi scheme that collectively cost them and others at least a few million dollars.
The Securities and Exchange Commission has been investigating.
Various investors sued Van Gundy and her company, Outstanding Real Estate Solutions Inc., or ORES, including for fraud, civil conspiracy to defraud and breach of loan agreements.
Van Gundy responded by filing for personal bankruptcy on April 27, putting on hold the litigation against her.
“If Ms. Van Gundy’s bankruptcy is dismissed, then the multiple lawsuits pending against her can proceed in the various courts and she will not receive a discharge on her debts,” said San Antonio lawyer David Jed Williams, who represents a group that sued her and her company.
The trustee wants the bankruptcy dismissed “without prejudice,” meaning Van Gundy could refile the case. Wilkins did not immediately respond to a request for comment Tuesday, so it could not be determined if he would oppose the motion to dismiss.
Williams said even if the bankruptcy isn’t dismissed, he expects many creditors will object to Van Gundy receiving a discharge of the debts she owes them because of the allegations of her fraudulent conduct.
In her bankruptcy papers, Van Gundy reported about $1.6 million in assets and almost $353,000 in liabilities. Her home, valued at $1.5 million, and two vehicles account for most of her assets. She did not list any financial assets. She described as “unknown” the amounts owed to more than a dozen creditors.
Some of the lawsuits against Van Gundy and ORES were filed in Comal County, where she resides.
Prior to the bankruptcy, Judge Dib Waldrip in Comal County appointed a receiver to take over ORES. It has not filed for bankruptcy.
The creditors meetings haven’t been particularly enlightening for creditors wanting to know where their money went.
At the first meeting May 26, Van Gundy told those listening roughly a hundred times that she did not remember, recall or know the answer when questioned.
That meeting, also conducted by telephone, was cut short after Wilkins said Van Gundy had suffered two seizures during the proceedings.
The meeting was reset to June 23 but it also ended early because she had a seizure, her lawyer said. The meeting continued until July 14, but Van Gundy did not appear. Thursday marked the latest reset.
“It’s really up to the (bankruptcy) judge on how he wants to proceed on it,” Osherow said. “Obviously, I can’t do my job if Ms. Van Gundy fails to appear.”