Receiver, Forensic, Litigation, Bankruptcy and 363 Sale
Allegations of international embezzlement led to the appointment of a Senior EGI Director as a court-appointed Receiver for a carpet distributor. The Chairman of the Company’s Board of Directors was alleged to have looted a U.S. Company owned by overseas investors. At the same time, two European companies had sued the U.S. Company for millions of dollars in unpaid inventory as well as copyright and trademark infringement. In addition to taking control of the Company’s operations, the Senior EGI Director performed a forensic exam of the carpet company’s books and records and quickly moved to resolve the litigation against the Company.
The exam confirmed the allegations against the Chairman of the Board and also revealed that the carpet company was insolvent. After holding a warehouse sale to fund the necessary travel expenses, the Senior EGI Director and the attorneys for the parties were able to settle the litigation against the Company by then traveling (during off hours) to Belgium and meeting with representatives of the two entities in litigation against the U.S. Company.
In the settlement that was reached, one of the litigants bought all of the assets of the carpet company while a portion of the proceeds was paid to the other litigant. The sale was effectuated by putting the carpet company in bankruptcy and selling its assets in a Section 363 sale in which the entire bankruptcy process and sale was completed in approximately three months.
