PART 1
Eight hundred dogs live on a ridge above Acton, California. Most of them are unadoptable. They are blind, or too old, sick, or broken from where they came from to be safe in a home with children.
They came to DELTA Rescue because the founder, Leo Grillo rescued them in the forest or desert where their owners had abandoned them.
Grillo promised every one of them, starting 47 years ago when he started DELTA that they would never have to leave.
Five hundred cats live there too. And horses, pot-bellied pigs, bulls, goats and hundreds of birds. The horses are old. Many of the cats are old.
The whole place runs on a principle: once an animal arrives at DELTA, the animal stays until the animal dies of natural causes, in a place where it is fed, watered, sheltered, and not afraid.
On June 2, 2026, a federal bankruptcy judge in downtown Los Angeles will be asked to approve a transaction that the sanctuary’s Board says could break that promise.
The judge is Neil W. Bason. The trustee asking him to approve it is Todd A. Frealy, a partner at the Los Angeles bankruptcy firm Levene, Neale, Bender, Yoo & Golubchik.
Frealy was appointed Chapter 11 trustee of DELTA Rescue in May 2025 after the sanctuary filed for bankruptcy protection following a $2.9 million wrongful-termination judgment.
Frealy now wants Judge Bason to sign an order authorizing him to liquidate $4.7 million in investment securities from DELTA’s Merrill Lynch accounts. The money will go toward paying a $5.5 million settlement of the former employee’s claims, including a $4.25 million attorney-fee demand that no court has ever approved.
The sanctuary’s board — including DELTA’s directors, along with Secretary Erica Grillo and founder Leo Grillo — has filed an opposition through Santa Monica attorney Keith Berglund.
The opposition makes a simple argument. The investment portfolio Frealy proposes to liquidate is not corporate surplus capital. It is the operating reserve that keeps 1500 animals alive.
If you doubt that characterization, the trustee himself proved it earlier in the case.
The bankruptcy docket shows that in 2025 and again in 2026, Frealy filed emergency motions seeking the court’s authority to draw from the Merrill Lynch accounts to pay staff salaries, animal food, medication, and utility bills. (Docket numbers 40, 130, 174, and 221.)
The trustee characterized those funds, when he needed them for sanctuary survival, as essential to keeping the animals fed and the facility running.
He has now reversed course. The funds he previously called essential are now, in his words, available for disbursement to creditors.
What happens to a care-for-life sanctuary when its operating reserve is depleted by roughly one-third in a single transaction?
Monthly investment income drops. Burn rate exceeds donations more frequently. Staff cuts follow. Vendor relationships deteriorate. Veterinary care contracts. Medication rationing begins.
At some point — months, not years — the math forces decisions that nobody at DELTA has had to make in 47 years.
You cannot adopt out 800 dogs in a hurry. You cannot adopt out blind cats and arthritic horses and dogs that bite when they are surprised. The only fast exit for those animals is a kill shelter.
The kill shelters in Los Angeles County are full. The kill shelters in surrounding counties are full.
Erica Grillo, DELTA’s corporate Secretary put it in her sworn declaration to the bankruptcy court: “The lives of the animals will be placed at immediate and severe risk.” Many of them, she wrote, “have nowhere else to go.”
The trustee’s reply does not address that. It does not contain a survival plan. It does not contain a veterinary impact analysis or an operating budget projection for the months following the liquidation he proposes.
It contains a settlement number and the math required to fund it.
This is the first installment in a Frank Report series on the DELTA Rescue bankruptcy and the trustee’s motion to liquidate its sanctuary investments. The hearing is set for 1:00 p.m. on June 2, 2026, in Courtroom 1545 of the United States Bankruptcy Court for the Central District of California.
ARTVOICE ART
