08/16/2007 182 Motion to Appoint Chapter 11 Trustee, filed by Creditors 10315 LLC, John P. Murphy III Revocable Trust No 1, John P Murphy III, Pro Plas LLC. Hearing scheduled for 8/30/2007 at 10:00 AM at Lexington Courtroom, 3rd Floor. (Smotkin, Howard) (Entered: 08/16/2007)
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Doc 182
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF KENTUCKY
LEXINGTON DIVISION
In Re: Case No. 07-50935
Judge William Howard
PRO MOLD, INC.,
Chapter 11
Debtor. )
MOTION BY THE MURPHY ENTTIES FOR APPOINTMENT OF A CHAPTER 11 TRUSTEE
Creditor John P. Murphy, III Revocable Trust No. 1; Pro Plas, LLC, a Missouri limited liability company; 10315, LLC, a Missouri liability company; and John P. Murphy, III (collectively the "Murphy Entities"), by and through their attorneys, pursuant to 11 USC §1104, move for the appointment of a Chapter 11 Trustee in this proceeding and in support of this motion respectfully state:
1. On August 9, 2007, the Office of the United States Trustee filed its Motion for Appointment of a Chapter 11 Trustee in the matter of In re Plasticon International, Inc., USBCEDKY Case No. 07-50934, Document No. 156 (the "Plasticon UST Motion.")
2. On August 9, 2007, the Office of the United States Trustee filed its Motion for Appointment of a Chapter 11 Trustee in the matter of In re Pro Mold, Inc., USBC-EDKY Case No. 07-50935, Document No. 175, (the "Pro Mold UST Motion.").
3. The Pro-Mold UST Motion adopts by reference the Plasticon UST Motion as the basis for the appointment of a Chapter 11 Trustee in the Pro-Mold bankruptcy case.
4. Similarly, the Murphy Entities adopt by reference the Plasticon UST Motion, which sets forth compelling grounds for the appointment of a Chapter 11 Trustee.
5. In addition, the Murphy Entities adopt by reference the allegations in their Motion for Relief from the Automatic Stay filed in this matter on June 15, 2007, Document No. 77, to the extent such allegations constitute cause for the appointment of a Chapter 11 Trustee in this case.
6. Further, the Murphy Entities adopt by reference the allegations in the Motion for Relief from the Automatic Stay filed by Pro Plas, LLC in the Plasticon International, Inc. case on June 22, 2007, Document No. 83, to the extent such allegations constitute cause for the appointment of a Chapter 11 Trustee in this case.
7. As additional grounds the for the appointment of a Chapter 11 Trustee, attached hereto and incorporated herein as EXHIBIT 21, is a schedule detailing a series of unauthorized post-petition transfers, totaling more than $90,000, made by Debtor Pro Mold in direct violation of this Court's Interim Cash Collateral Order.
8. Most of the transfers were from Debtor Pro Mold to Debtor Plasticon or LexReal Co. LLC, an entity owned and/or controlled by James N. Turek, Sr.
9. Even more alarming is the fact that these unauthorized transfers appear to be accelerating, threatening Debtor Pro Mold's survival.
10. The transfers are contrary to the best interest of Debtor Pro Mold's secured and unsecured pre-petition and postpetition creditors, because the transfers diminish the potential recovery for these creditors and provide no true benefit to Debtor Pro Mold.
11. Previously, the payments to Debtor Plasticon were being made by Debtor Pro Mold at the rate of $7,500.00 per week.
12. In the most recent reporting from Debtor Pro Mold two payments of $7,500.00 each were made within days of each other.
13. On information and belief, all of these unauthorized transfers were made at the direction of James N. Turek, Sr.
14. Not surprisingly, the beneficiaries of these transfers were largely James N. Turek, Sr. and members of his family.
15. An action pursuant to 11 U.S.C. §549 should be commenced to recover the unauthorized payments.
16. If James N. Turek, Sr. remains in control of the Debtor no action will be taken to recover these unauthorized transfers and Debtor Pro Mold's creditors will suffer as a result.
17. 11 U.S.C. §1104(a) permits the Court to consider and effect the appointment of a Chapter 11 Trustee "at any time after the commencement of the case..."
18. 11 U.S.C. §1104(a)(1) provides that the Court shall order the appointment of a trustee:
(1) For cause, including fraud, dishonesty, competence, or gross mismanagement of the affairs of the debtor of current management, either before or after the commencement of the case, or similar cause, but not including the number of holders of securities of the debtor or the amount of assets or liabilities of the debtor...
19. 11 U.S.C. §102(3) makes it clear that the use of the word "including" is not limiting, and thus any cause found by the Court is sufficient to mandate the appointment of a trustee.
20. 11 U.S.C. §1104(a) further states that the Court shall order the appointment of a trustee:
(2) if such appointment is in the interests of creditors, any equity security holders, and other interests of the estate, without regard to the number of holders of securities of the debtor or the amount of assets or liabilities of the debtor...
21. To protect the interest of all of the creditors of the estate, and to preclude a debtor-in-possession from continuing to manage the business and affairs of the debtor after filing the petition, the Court should promptly and fully review any allegations that justify cause as the basis for the appointment of a Chapter 11 Trustee.
22. Moreover, even if the Court does not find cause, 11 U.S.C. §1104(a)(2) permits the appointment of a trustee if it would be in the interest of the creditors and other interests of the estate.
WHEREFORE, the Murphy Entities pray that this Court order the immediate appointment of a Chapter 11 Trustee and award such other and further relief as this Court deems just and proper.
NOTICE OF HEARING
Please take notice that the foregoing shall come on for a hearing before the Bankruptcy Court for the Eastern District of Kentucky, Lexington Division on August 30, 2007 at 10:00 a.m. or as soon thereafter as may be heard, at the United States Bankruptcy Courthouse, 100 East Vine Street, 3rd Floor Courtroom, Lexington, Kentucky 40507.
STONE, LEYTON & GERSHMAN
A Professional Corporation
By:
E. Rebecca Case, EDMO #2800
Howard S. Smotkin, EDMO #4407
7733 Forsyth Boulevard, Suite 500
St. Louis, Missouri 63105
(314) 721-7011
(314) 721-8660 Facsimile
erc@stoneleyton.com
hss@stoneleyton.com
Attorneys for Pro Plas, LLC
GREENEBAUM DOLL & MCDONALD PLCC
John W. Ames
Gregory R. Schaaf
300 West Vine Street, Suite 1100
Lexington, Kentucky 40507
(859) 288-4629
(859) 367-3877 Facsimile
grs@gdm.com
Local Counsel for Pro Plas, LLC
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of the foregoing document has been served electronically in the method established under CM/ECF Administrative Procedures Manual and the Local Court Standing Order dated July 25, 2002 via electronic and/or first class, postage prepaid U.S. mail on this 16th day of August 2007.
Howard S. Smotkin
EXHIBIT 21
PRO MOLD, INC.
USBC-EDKY 07-50935
CHAPTER 11
UNAUTHORIZED POST-PETITION TRANSFERS
DATE DESCRIPTION - PAYEE SUB-TOTAL AMOUNT COMMENT
31-May-07 Lex Real $ 14,000.00 UMB Wire Transfer - Transfer to Insider Entity - Not Budgeted - No Known Purpose
31-May-07 Chantal Appraisal $ 3,500.00 UMB Check No. 1946 - Equipment Appraisal - Professional Not Employed - Not Budgeted
01-Jun-07 Chantal Appraisal $ 500.00 UMB Check No. 1952 - Equipment Appraisal - Professional Not Employed - Not Budgeted
05-Jun-07 Chantal Appraisal $ 800.00 UMB Check No. 1954 - Equipment Appraisal - Professional Not Employed - Not Budgeted
27-Jun-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
$ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
$ 4,849.84
Wire Transfer from UMB Account - Payment of Receivable Collected from Plastcion Product Sale - Transfer to Insider Entity - Not Budgeted $ 19,849.84
03-Jul-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
10-Jul-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
17-Jul-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
24-Jul-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
01-Aug-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
06-Aug-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
08-Aug-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
$ 91,149.84 TOTAL |
