Extracts of 3rd Amended Disclosure
Doc. No. 285
Filed & Entered: 02/23/2005
Amended Disclosure Statement
II. HISTORY OF THE DEBTOR AND REASONS FOR FILING PETITION
International Plastic Corporation, Inc. (IPC) was a privately held Kentucky corporation formed by Debtor in 1988 and Wicklund Holding Company (WHC) is a Delaware corporation created by the Wicklund family and went public in 1981.
In June 1997, WHC, although a non reporting NASDAQ shell name, was dormant, merged into IPC and the Wicklund name was retained. As a result of this merger, IPC’s shareholders ended up with 80% of the shell stock as IPC had assets valued by appraisal at nearly $15,000.000.00 (molds and patents). At the time, IPC had 124 shareholders and Wicklund had approximately 800 shareholders. After the merger, Wicklund issued approximately 5.6 million of its 20 million shares of Treasury Stock.
On June 30, 1997, WHC looked to acquire or merge with other companies, as it only required sales and SEC approved audits to again be trading on NASDAQ and initiated negotiations in 1998 for the acquisition of Florida Curbing, Inc. (FC) and Laser Engineering, Inc. (LE) (sister companies with same owners) and acquired these companies in 1998.
The acquisition occurred through a reverse triangle “A” merger in which a company is created to put the acquired companies into so that they supposedly cannot carry “baggage” with them into the merger (i.e., back taxes, payables, fraudulent transactions, etc), and in the event that fraud was subsequently discovered. To accomplish this merger Wicklund’s lawyers created Wasalooski Inc., which merged with FC and LE in December 1998, at which time Wasalooski ceased to exist by operation of law with the survivor being Wicklund with FC and LE as its two subsidiaries.
In order to be trading in NASDAQ, WHC was required to have Securities and Exchange Commission (SEC) audits covering three years (2 years prior to the merger, and 1 year after the merger) and initial audits of FC and LE were started in early 1999. WHC with its assets arranged for funding against FC & LE receivables.
During the period December 1998 through Wicklund’s recission of the merger in November of 2000, at various times, Town Finance, Wicklund, through First National Bank of Barnesville, Emerald Coast Bank and Export Finance Network served as factors for FC & LE receivables.
Upon the initiation of the audits, LE’s CFO disappeared. The auditors told WHC and Debtor that LE and FC were not auditable as their books were loaded with fraud (un-reported receivables and receivables reported current that in some case were 6 months old), just to start.
FC had the same problems as LE but much worse and included fraud related to a clandestine and fraudulent relationship between the original owner of FC (who remained as its operations officer and president by contract) with an unknown minority contractor and operated out of the offices of FC.
Three SEC approved and insured Auditing firms concluded that LE & FC were not auditable. Letters from the various auditing firms are attached as Composite Exhibit “A.”
During this relationship with FC, Debtor’s signature stamp was stolen from his accounting and bookkeeping firm in Florida. Turek’s signature card at Nations Bank/Bank of America was changed without his permission resulting in $1,500,000.00, plus, being drained, WHC and Debtor believe, by the original owner of FC & LE Rudy Poselli. Payroll checks normally signed by him as President of FC were stamped with Debtor’s stamped signature beginning in May of 2000.
WHC and Debtor did file a criminal Complaint in Broward County, Florida in June 2000, which is still pending. The Broward County Sheriff’s Department also suggested Debtor file a lawsuit as it would help them. Unfortunately, Debtor had used all his means to continue moving forward and subsequently filed to reorganize under Chapter 11. As a result of this fraud, Debtor lost valuable real property in Bay County, Florida, as well as his significant equity in his pleasure boat and fishing boat. Wicklund is now known as Plasticon International, LLC.
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The claims of creditors are divided into twenty classes or sub-classes. Administrative Claims, including all fees remaining to be paid to the Bankruptcy Court or the U.S. Trustee's Office and professional fees and expenses approximating $75,000.00 will be paid in full, in cash, on the Effective Date, or as agreed to between the parties. The claims of the Class 1 Creditor, Bank One will be paid in full with interest at 7% per annum amortized over a period of ten years with a balloon payment due after five years, the Class 2 Creditor, Central Bank, will be paid in full with interest at the rate of 7% per annum amortized over a period of ten years with a balloon payment due after seven years; the Class 3 Creditor, Community Trust Bank will be paid pursuant to the terms of its contract, payments amortized over a period of seventeen years and any balance due paid in full upon any closing on a sale of the real property securing their debt; the Class 4, Daimer Chrysler, and the Class 7, GMAC claims have been satisfied; the Class 5 creditor, Eastern Savings Bank, will have its Class A claim satisfied by payment in full with interest at 9.99% per annum amortized over a period of twenty - five years and its Class B claim will be satisfied by payment in full together with interest at 8.5% per annum amortized over a period of twenty-five years with a final balloon payment due after five years; the Class 6 creditor, Edgewater Beach Resort Community Association will have its claim satisfied in full with interest at the rate of 7.9% per annum amortized over a period of eighteen months; the Class 8 creditor, Hartland Homeowners Association, will have its claim paid in full ten days after the Effective Date; the Class 9 creditor, Kentucky Bank, shall have its claim satisfied in full with payments pursuant to the current contract rate with adjustments which may be required as a result of this creditors loan index rate; the Class 10 creditor, Kitch Drutchas, will have its secured claim satisfied in full with half of same paid upon the Effective Date and the remaining half, together with interest at 7% per annum, being paid within six months of the Effective Date; the Class 11 A&B creditor, LFUGC-Division of Revenue shall have its claims paid in full together with interest at 7% per annum with payments over a period of five years; the Class 12 creditor, Marlinrob, Inc., shall have its claim paid in full with interest at 7% per annum amortized over a period of fifteen years and any balance due paid in full upon any closing of a sale of the real property which is security for its debt; Class 13 creditor, National City Bank has been satisfied in full pursuant to a Consent Order providing for adequate protection payments; the Class 14 creditor Stoll, Keenon & Park, LLP will be paid in full together with interest at the rate of 4.25% per annum amortized over a period of twenty-five years with a balloon payment at the end of fifteen years and any balance due paid in full upon any closing of a sale of the real property which is security for its debt, with the balance of its claim being unsecured and treated as a Class 18 claim; the Class 15 claim of Bay County Tax Collector will be paid in full within thirty days of the effective date; the Class 16 secured claim of Dennis Joslin will be treated as a Class 20 claim pursuant to a stipulation with Wicklund and debtor; the Class 17 secured claim of Edgewater Beach Resorts Partnership will be satisfied by crediting Debtor with the value of the Wicklund stock held as security as of the effective date, with the balance of its claim treated as a Class 20 unsecured claim; the Class 18 unsecured creditors will be paid in full, with interest at 1½% per annum with payments being amortized over a period of fifteen years with monthly payments over a period of five years and a balloon payment at the end of the five year period.
The present value of these creditors claims is approximately 93% of the claims for 5 years and 84.5% as to the balloon. Class 19 administrative class shall have their claims satisfied in full without interest by quarterly payments for one year. The present value of these creditors claims is approximately 99 % of the claims. Class 20 unsecured creditors, will have their claims against Debtor paid in full by transfer of stock with a present value approximating 11 % of their claims being issued by Wicklund Holding Company upon confirmation of Debtor’s Plan, at which time Debtor will be released from liability and Wickland will remain liable for the balance of the joint debt secured by the Wicklund stock until the Wicklund stock is sold, at which time any balance owed by Wicklund will be deemed satisfied and paid in full and the terms of any stipulation between Plasticon and/or debtor with members of this class shall control to the extent inconsistent with the plan.
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XI FEASIBILITY AND BEST INTEREST TESTS
For purposes of determining whether the Plan meets the feasibility test, Debtor believes that he has the ability to meet his obligations under the Plan and that same is feasible. Debtor is now employed as Managing Partner of Show Me Ink, LLC, a company that dates to 1906. The Debtors salary of $175,000.00 and 10% of sales and commissions (minimum of $50,000.00 annually based on historical records) allow him to meet his obligations as presented in this Plan. Additionally, Debtor is waiting for final FDA approval of the “Sports Patch” whose inventors predict first year sales of $25 million dollars. They have entered into an agreement with PC, Inc., an affiliate of Wicklund for PC Inc.’s marketing and distribution of patch and products in exchange for which the inventors will receive ten percent of PC Inc.’s net sales. This device measures and predicts when an individual is about to have a stroke or heart attack. It has been tested successfully on a nationally ranked Florida football team and upon final FDA approval, the marketing of same will begin.
In addition to the sports patch referenced above, a WHC affiliate has recently completed a several million dollar acknowledgee sale, the proceeds of which will be received over the next several years. This information has recently been cleared for release to the public and should be released in the immediate future.
Debtor’s personal Wicklund Holding Company stock, while having the same value as any shareholders, is regulated by Rule 144 of the 1934 Security Act. This Rule provides the means by which debtor or a control person or officer, can sell their stock. Specifically, debtor can only sell a small percentage based on current trading volumes or a small percentage per month based on ownership. This control prevents the debtor or others from benefitting at the expense of other stockholders.
Wicklund’s offering in the Plan of WHC Treasury Stock as a legal consideration in trading company debt for stock, provides for a reasonable release of stock and provides a means to settle WHC debts and Debtors guaranty of those Wicklund debts. So long as WHC debt is cancelled in exchange for WHC treasury stock and pursuant to SEC Rule 144(e) the treatment provided in Debtor’s Plan of Wicklund providing its stock for satisfaction of its debt and Debtor’s guaranty of those debts is permissible.
In summary, Debtor’s annual income of $175,000.00, and minimum of $50,000.00 in bonuses as well as his wife’s salary of $43,000.00 (she contributes her share), together with the prior assumption of some obligations and his or his wife’s payment of others allows him to make the payments in this Plan.
Debtor has attached a chart at Exhibit “A” which covers the period January 1, 2005 through December 31, 2006 and which consists of a budget showing projected revenue per month and personal expenses per month. A review of the chart indicates that Mr. Turek will have the ability to meet the payments required under his Second Amended Chapter 11 Plan. The attached chart may be modified prior to confirmation due to changes in amounts of claims attributable to interest accruing and to correct any errors which may be discovered prior to confirmation. |
