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Trustee to intervene in Premier bankruptcy

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The U.S. Trustee's office plans to file a motion to intervene in a Chapter 11 bankruptcy case brought by Premier Properties USA Inc. because the development firm is insolvent.

Two court hearings last week made it increasingly clear that Premier is in no position to work its way out of bankruptcy: None of its employees have been paid for at least eight weeks, and the firm's operating account balance has fallen to $14.33.

U.S. Bankruptcy Court Judge Basil H. Lorch III said he will consider Trustee Mark Drummond's request to convert or dismiss the Chapter 11 filing at a hearing May 30. Drummond had not filed the request as of this morning.

The judge also ordered Premier to allow officials from the local office of CB Richard Ellis to access the company's headquarters at Woodfield Crossing to gather records on behalf of Atlanta-based Dominion Capital Management LLC, which now controls most of Premier's properties, including Metropolis mall in Plainfield.

In another order, Lorch allowed Premier to pay $73,000 in health insurance premiums so the firm's employees would be covered through the end of March. To afford the payment, Premier founder Christopher P. White deposited $26,600 in the firm's operating account. The firm also owes $45,000 for its April premium and an undetermined amount for May.

The payment was a concern for creditors who have struggled to determine what - if any - assets Premier owns. They wondered where the money was coming from.

"Premier Properties is not an operating entity," Ice Miller attorney Henry Efroymson, who represents Dominion, said at a hearing. "It's time for a trustee - we need someone to take control of this situation."

William J. Tucker, Premier's bankruptcy attorney, said White still is trying to raise equity to save his 15-year-old company. The firm filed for Chapter 11 bankruptcy on April 23.

"We are not trying to put up roadblocks or hide," Tucker said in court. "We are actually trying to survive."

The strategy includes a new tactic: Premier's attorneys now claim that Dominion, its mezzanine lender, owes Premier about $1 million in back management fees now that Dominion has taken control of its properties. The claim drew laughs from attorneys for the creditors. Dominion took control of the properties to try to recover loans totaling more than $100 million.

Some of the new details about the extent of Premier's troubles emerged in testimony from Christi Minars, Premier's controller for two years. She said there are 62 different account ledgers for Premier entities ranging from planes and properties to a restaurant.

Minars said she previously had a staff of 10 but now is doing all the work alone, without pay. She said Premier's operating bank account, with Chase, has a balance of $14.33 after the insurance bill. Dominion and other creditors plan to pay Minars for her work in helping them track down appropriate records, at the court's request.

During her testimony, Minars said Premier drew $12,000 on a loan for Venu - a giant mixed-use development proposed for the southwest corner of 86th Street and Keystone Avenue - and spent the money on unrelated bills just days before the firm filed for Chapter 11 bankruptcy.

Efroymson asked Minars whether Premier officials destroyed any documents or kept a second set of books. Minars said no to both questions. She also denied she's romantically involved with White.

White, Minars and Premier's chief financial officer are scheduled for a deposition tomorrow to address allegations that the company illegally diverted about $600,000 in rent payments from tenants at Woodfield Crossing.

To read more of IBJ's coverage of Premier Properties, visit IBJ.com/premier.

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  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

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