The U.S. Justice Department is asking a judge to throw out Aletheia Research and Management Inc.'s bankruptcy case, saying that the state of California's decision earlier this year to suspend the company's corporate powers makes it ineligible for chapter 11 protection, Dow Jones Daily Bankruptcy Review Small Cap reported yesterday. In papers filed with the U.S. Bankruptcy Court in Los Angeles, the U.S. Trustee Peter C. Anderson said that a "suspended corporation cannot properly conduct business, initiate legal proceedings, and initiate a chapter 11 bankruptcy petition." California suspended Santa Monica-based Aletheia's corporate status in October as a result of its failure to pay its 2008 income taxes and penalties for 2020, 2011 and 2012 for late-filed returns. If the court declines to throw out the chapter 11 case, the trustee asked that a chapter 11 trustee be appointed to manage the company during the proceedings in light of the "sustained and continuing" decline of the company's assets under management and "loss of confidence by investors" "before the company's business deteriorates to the point that it can't be saved. A court hearing on the trustee's request is set for Jan. 15. Aletheia Chief Executive Peter J. Eichler Jr. put the company into chapter 11 protection last month to help it cope with the legal battles that have caused clients to take nearly $6 billion out of the firm, which provides advice and management services to securities investors.
