Forced by creditors into involuntary Chapter 11 reorganization earlier this year, Deca Financial Services LLC instead is headed for oblivion.
On Monday, U.S. District Bankruptcy Judge Robyn Moberly approved a request by Deca’s bankruptcy trustee to terminate and wind down operations of the Fishers debt collection agency.
“The trustee has not been able to find substitute vendors willing or able to assist in the reorganization of the debtor,” trustee attorney John Hoard, of Rubin & Levin PC, said in an April 10 court filing. The filing said that as of Feb. 21, Deca owed key vendors $935,000.
Hoard could not be reached for comment Tuesday morning.
The U.S. Trustee’s office said Deca needs to retain about 11 employees to wind down operations over the next 60 days or so
It’s believed Deca had about 80 employees before a handful of creditors asked the court on Feb. 21 to place the company into involuntary Chapter 11.
It’s an astounding reversal for three-year-old Deca. Touted by economic development leaders as one of the state's most-promising young companies, the firm in 2012 was offered $2.5 million in conditional tax credits by the Indiana Economic Development Corp. Those credits would have kicked in had Deca created 270 jobs by 2015.
But Deca won’t hit that target. BMO Harris Bank, which previously made Deca a $3.3 million real estate loan and issued it a $7.5 million revolving line of credit, began freezing Deca’s accounts last year.
Deca claimed the freeze created havoc in its cash flow. In January, Deca successfully petitioned Hamilton Superior Court to compel the bank to unfreeze its accounts, at least for a time. But under questioning by attorneys for BMO, company insiders testified Deca was having trouble paying some clients before the account freeze.
Moreover, BMO cited concerns with Deca’s financial statements and that receivables were overvalued.
Deca co-founder Todd Wolfe said he’d been sidelined from the company for some time due to a fight with stomach cancer. When he returned late last year, he dismissed a number of managers, including friend and executive David Hoeft.
Hoeft, who helped Deca procure the first phase of a U.S. Department of Education contract, testified that after he was temporarily named president of Deca he discovered that someone had moved $2 million from a company account.
For his part, Wolfe blamed what he said was a botched attempt by managers in his absence to refinance a mortgage loan on land the company uses.
Fingerpointing ensued, and the final blow came when several customers petitioned the court in February to place the company into involuntary bankruptcy reorganization, alleging they were owed more than $362,000.
The court gave Wolfe a few weeks to come up with the money. Wolfe said he’d lined up a potential $11.5 million loan secured by real estate to inject capital into the company and pay creditors. But the deal for financing fell through at the last minute, and last month the court OK’d Chapter 11.
Deca was the second debt collection firm launched by Wolfe. In 1999, he started Indianapolis-based Premiere Credit North America. It was later acquired.
Much of Deca’s business was in collecting medical debt.
It’s not immediately clear how much the company has in potential assets that could be liquidated. Earlier this month, the court approved selling 31 of the company’s personal computers for $31,000.
Correction: An earlier version of this story incorrectly stated that David Hoeft was a co-founder of Deca Financial Services.