Posted on 09/15/2004 4:56:26 PM PDT by Sub-Driver
Court Appoints Chapter 11 Trustee for AmeriDebt By Stephen Manning The Associated Press
GREENBELT, Md. (AP) - A federal bankruptcy judge appointed a Chapter 11 trustee Wednesday for AmeriDebt, the beleaguered credit counseling company that now faces a $15 million claim from the Internal Revenue Service over its disputed status as a nonprofit. AmeriDebt filed for Chapter 11 protection in June, saying it had $12 million worth of liabilities but only $8.4 million in assets. The trustee appointed by Judge Paul Mannes will guide the company and its creditors through the bankruptcy process.
The Federal Trade Commission filed suit in November against Germantown-based AmeriDebt and its founders, Pamela and Andris Pukke, claiming the company bilked money from thousands of customers through deceptive marketing. The attorneys general of four states have also sued the company.
In documents filed last week in the bankruptcy case, a court examiner indicated that the IRS filed the claim against AmeriDebt because the tax agency believes the company's nonprofit status will be revoked.
The IRS action is based on a 1999 transfer of AmeriDebt's assets to Andris Pukke's for-profit company that processed AmeriDebt's clients in exchange for hefty fees. The IRS is probing whether AmeriDebt skirted tax law by transferring that money to Pukke and the company, DebtWorks, according to the court examiner's report.
(Excerpt) Read more at ap.tbo.com ...
I'm going to try to be circumspect in my comments, but trustees are not generally appointed in a Chapter 11 unless one of two conditions appears. First, a trustee may be appointed pursuant to a confirmed plan which calls for slow, orderly liquidation of assets. Second, the debtor in possssion is not meeting its fiduciary obligations.
Wow. That's really kind of funny.
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