Wade Cook Financial Ordered Liquidated by Judge (Update1)
By David Evans
Seattle, Jan. 17 (Bloomberg) -- Wade Cook Financial Corp. was ordered liquidated by U.S. Bankruptcy Judge Thomas Glover after the money-losing stock-market seminar company's chief executive failed to provide testimony requested by creditors.
The creditors of Seattle-based Wade Cook Financial asked the court Dec. 19 to force the company and its subsidiary, Stock Market Institute of Learning Inc., into bankruptcy, alleging employees hadn't been paid back wages and that their health insurance was canceled after the company collected and pocketed premiums.
Wade Cook Financial's ``failure to respond to the discovery requests have prejudiced and irreparably harmed'' the creditors ``by denying them the ability to adequately prepare for trial,'' wrote Glover in ordering the Chapter 7 bankruptcy.
In Chapter 7, the bankrupt company is liquidated by a trustee. The trustee supplants the existing management and is legally obligated to serve the best interests of creditors.
Chief Executive and founder Wade Cook said he will ask the judge to convert the case to a Chapter 11 reorganization in which the company can continue to operate. He said he would consent to the appointment of a trustee to oversee operations.
``Nobody is saying we haven't been struggling financially,'' Cook said in a brief telephone interview. ``We've got plenty of assets.''
Cook predicted a year ago that the company would earn $6 million in 2002. The company lost $6.2 million in the first nine months of the year, according to a filing with the U.S. Securities and Exchange Commission.
Working Capital Deficit
The company had $16,000 in the bank on Sept. 30, according to an SEC filing. The filing showed liabilities of $11.5 million and assets of $5.7 million, leaving a working capital deficit of $5.8 million.
Michelle Carmody, an attorney for the creditors, said the company failed to provide any financial records requested under bankruptcy law.
``We had a deposition scheduled for Wade Cook on Tuesday. He didn't appear,'' Carmody said.
The market value of Wade Cook Financial's outstanding shares is $720,000. The stock gained 1 cent to 11 cents in over-the- counter trading at 2:16 p.m. New York time.
FTC Settlement
In October 2000, the company, which charges $6,295 for its 16- hour ``Wall Street Workshop,'' settled Federal Trade Commission charges that it misrepresented its stock trading success to attract customers. The company disclosed that it lost 89 percent of its stock portfolio's value in 2000 and 60 percent in 2001.
The FTC estimated the company still owes $1.5 million to its former customers as part of the settlement, in a filing with the bankruptcy court on Jan. 15.
``Mr. Cook is personally liable under the redress program,'' wrote FTC attorney Randall Brook in a motion to the court. Under the settlement, the FTC will be able to require Cook personally to make good on the settlement after Feb. 20, according to Brook. |
