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.