Moonstone, Quest Go to Bankruptcy Court
A federal bankruptcy court judge granted relief (awarded the right to
assets from the sale of
property) to the lawyers representing Congress Financial in U.S.
Bankruptcy Court, Santa Rosa,
Calif., on October 9. Though no objections to relief were offered, the
judge put a stop to an attempt
by the court-appointed trustee to add document stipulation on behalf of
Congress and another party.
The judge ruled that he would grant relief and that under no
circumstance was the trustee to attempt
to act as a broker on behalf of any of the secured parties. The
trustee's attorney informed the court
that to date, she had collected $100,000 in payments through redirected
mail that would go toward
satisfying claims.
With the judge's ruling, the inevitable outcome is a bidding war for
Moonstone among several parties,
including:
Niwot which is owned by Planet Sports and whose directors include
Kevin Furnary, Tom
Raebe, and Fred Boethling. Niwot, managed by Tom Balcum, owns
Boulder Designs, JRAT,
Mountain Mend and Straight Up climbing holds. Furnary serves as the
president of JRAT.
Kenny Ballard and Tom Lane (both formerly of Moonstone/Quest) and
other unnamed
investors.
Continental Plant, a Portland, Ore.-based, liquidator that has
guaranteed Congress $1 million
plus a share of the proceeds in excess of that amount.
After the bankruptcy hearing, as the lawyers and parties were
introducing themselves, Drew Stawin,
vice president for Congress Financial, was overheard by Outdoor Retailer
telling both Raebe and
Lane, "Our bottom line in all this is show us the money."
Patricof officially filed for Chapter 7 bankruptcy protection on
September 19 on behalf of
Moonstone/Quest. Outdoor Retailer has learned that Chapter 7 was filed
on the advice of Patricof's
attorneys who feared lawsuits from creditors if the action was not taken
immediately and to help
facilitate the possible sale of Moonstone to interested buyers. Outdoor
Retailer has also learned that
in the initial Chapter 7 documents, Patricof listed the following
Moonstone/Quest assets and liabilities:
$8.4 million in assets; $6.1 million secured (company investors) debt
plus $3.1 million to unsecured
(suppliers and services) creditors for a total liability of $9.2
million. Congress Financial is first secured
with a $3.1 million to $3.5 million interest. Jinwoong is the second
secured seeking $1.5 million. It is
thought that Bill Bottoms, formerly of Patricof and now a private
investor, is also a secured debtor in
the range of $250,000. The other secureds are unknown.
The Chapter 7 filing also finalized the transfer of the Quest license
back to Jinwoong. With the
transfer of license, Jinwoong's attorney informed the court that
Congress will be prevented from
selling Quest goods. Scott Reeves, president of Jinwoong North America,
has indicated to Outdoor
Retailer that he has no intention of letting the Quest name die in this
country and is listening to offers
from interested parties. Niwot is in negotiations with Jinwoong; and
Woods Canada Ltd., a Canadian
manufacturer of outdoor gear based in Toronto, Ontario, is also
negotiating with Jinwoong. Woods
has no interest in Moonstone, we are told.
W.L. Gore's attorney, Peter Benvenutti, made it clear to the court that
Gore has no intention of
allowing Congress Financial to profit from its Gore-Tex trademark and
that it could not use raw
goods to produce Gore-Tex labeled goods to sell to eliminate the debt.
Gore revoked Moonstone's
Gore-Tex license when it filed Chapter 7 and also demanded return of its
property including
seam-sealing machines and raw goods.
Outdoor Retailer was told at the hearings that although it has been
rumored Moonstone goods are
being sold under the table, the sale of a large number of insulated
goods is being coordinated by
Ballard and Lane on behalf of Bottoms. According to Ballard, when
Moonstone was having financial
difficulty earlier in the year, management approached Bottoms (as a
private investor) to secure
funding for a production run. Ballard adds that Bottoms has possession
of about $250,000 in retail
value of insulated Moonstone product, which he is selling to retailers
through Ballard and Lane to
recoup his investment.
"The management team, not Hap [Klopp], went to Bill [Bottoms] seeking
funding to allow us to
produce goods," says Ballard. "Although Tom [Lane] and I were fired and
are out of work, when Bill
came to us seeking our help in selling off these goods, it was the least
we could do to help."
-Michael Hodgson |
