Not good news
WORCESTER-- Omni Multimedia Group Inc. lives, but the creditor whose money has kept it running since November can shut it down at any time, a U.S. Bankruptcy Court judge ruled yesterday.
ÿ ÿ ÿ ÿ ÿJudge James F. Queenan Jr. made the ruling after two hours of argument, during which he found that the besieged Millbury duplicator of CD ROMs and music CDs had failed to make good on its promise to find a buyer.
ÿ ÿ ÿ ÿ ÿQueenan also ruled that the company's continuing losses over the past two months had left a $4.2 million loan owed to Coast Business Credit of California undersecured.
ÿ ÿ ÿ ÿ ÿQueenan's ruling came after he rejected Omni arguments that over the last month a vengeful Coast loan officer had driven away Omni's customers and torpedoed the company's efforts to find a buyer.
ÿ ÿ ÿ ÿ ÿ"Coast is now undersecured," said Queenan in issuing his ruling. "Coast has the right to foreclose."
ÿ ÿ ÿ ÿ ÿDespite that finding, Coast lawyer Lewis A. Sassoon said Omni would continue to operate day to day while attempts continue to sell the company and restructure its finances.
ÿ ÿ ÿ ÿ ÿ"We would like to sell (the company) as an ongoing concern," said Sassoon. He indicated that Omni's management would be replaced, however.
ÿ ÿ ÿ ÿ ÿ"We lost," Robert E. Lee, Omni executive vice president and chief financial officer, said after the hearing. "We're cooperating with the bank, and on their instructions everything remains in place. It's business as usual for today. After that it's the bank's call."
ÿ ÿ ÿ ÿ ÿWhile willing to hold its fire for now, however, Coast will not keep Omni going indefinitely, Sassoon said. If a deal can't be put together in short order, he said, Coast will take steps to liquidate its interest in Omni. If that happens, the company would be shut down and its 250 employees would lose their jobs.
ÿ ÿ ÿ ÿ ÿIn January, Omni reported it was in talks with as many as five potential purchasers or investors, including Beamscope Canada Inc., a Toronto-based distributor of video games, computer equipment and satellite television systems.
ÿ ÿ ÿ ÿ ÿBut according to Omni's lawyers yesterday, over the last month Beamscope and at least one other potential purchaser lost interest after Coast officials made disparaging comments about Omni management.
ÿ ÿ ÿ ÿ ÿRichard L. Wise, lawyer for Lee and Omni Chief Executive Officer Paul F. Johnson, said those comments as well as other derogatory statements made to Omni customers were recorded by the company's electronic surveillance system.
ÿ ÿ ÿ ÿ ÿCoast lawyer Patrick G. Waters said any charges that Coast had turned potential buyers or customers against Omni amounted to "double and triple hearsay." He said any conversations of Coast officials taped without their permission are illegal and inadmissible in court.
ÿ ÿ ÿ ÿ ÿWaters said Omni's ongoing losses, which he said averaged about $75,000 a week last month, constitute another reason why Omni should no longer be allowed to use Coast's collateral to operate the company.
ÿ ÿ ÿ ÿ ÿ"We're losing money hand over fist. It's time to stop," said Waters. "We're undersecured any way you look at it."
ÿ ÿ ÿ ÿ ÿAccording to Omni lawyer Alan Shine, however, losses sustained by Omni during February were made worse by Coast's harassment of the company's customers.
ÿ ÿ ÿ ÿ ÿ"The company was severely impacted by the actions of the bank," said Shine, who presented figures projecting that if it is allowed to continue in business Omni will show an operating profit of $180,000 in March.
ÿ ÿ ÿ ÿ ÿOne sign that Omni may yet be saved came from Peter J. Hurley, head of a shareholders' group that has been pushing for a sale of the company and its continued operation under new management.
ÿ ÿ ÿ ÿ ÿ"We will be working diligently to realize value for the shareholders," Hurley said after yesterday's hearing. Hurley said his group will discuss Omni's refinancing possibilities with Coast Business Credit as early as today.
ÿ ÿ ÿ ÿ ÿBut according to Whitton E. Norris III, lawyer for a committee of Omni's unsecured creditors, unless a deal is made in the next few days, he will ask the court to convert Omni's bankruptcy status from Chapter 11 to Chapter 7. That would place the company under the direction of a court-appointed trustee who would be responsible for liquidating the company's assets and distributing the proceeds among its creditors. A hearing on that motion is
scheduled for Monday.
c 1998 Worcester Telegram & Gazette |
