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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