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AnonymousInactivehttp://www.cleveland.com/business/index.ssf/2009/11/inkstop_2.html
INKSTOP FILES FOR BANKRUPTCY OWES $
48Mil
CLEVELAND, Ohio — Ink and
toner retailer InkStop Inc. has filed for Chapter 7 bankruptcy, saying
the cash-strapped company owes too much money to reopen and will instead
liquidate its assets and close for good.InkStop laid off 456 employees
on Oct. 1, telling them it hadn’t paid their health care premiums for
the past month and didn’t have the money to issue their final
paychecks.”We are working on a plan to improve our cash flow and reopen
under better circumstances,” the board of directors told workers via fax
and e-mail on Oct. 1.But now the board says via its 495-page U.S.
Bankruptcy Court filing that InkStop owes nearly $48.3 million to more
than a 1,000 creditors.Board members chipped in the $20,379.97 in fees
and expenses to file for bankruptcy.InkStop owes $1.1 million in wages,
vacation pay and expense reimbursements to employees, including
$63,804.17 owed to CEO and co-founder Dirk Kettlewell.The company is the
subject of numerous lawsuits and legal complaints, including 95
evictions.The list of creditors does not include Chagrin Falls investor
Keith DeGreen, who invested $250,000 in the company just before it
collapsed. He is suing InkStop founders Dirk and Dawn Kettlewell, its
officers and board of directors for misleading him about the company’s
finances.Kettlewell could not be reached for comment.
Attorney
Steven Davis, who is representing InkStop in the bankruptcy, said the
filing was a liquidation proceeding that would take place according to
bankruptcy law.Jon Groetzinger, a visiting law professor at Case Western
Reserve University School of Law, said the fact that InkStop chose to
liquidate rather than try to reorganize and reopen is bleak news for
employees.”If the corporate entity has no money, then no payments are
going to be made to anybody,” he said.Secured creditors such as banks
and lending institutions are likely to get paid first, followed by
unsecured creditors such as the landlords where InkStop had its stores,
he said. Workers would come after that.But the attorneys
representing 205 former InkStop employees in a lawsuit disagree, saying
that just because the company is bankrupt doesn’t release its executives
and board members from their obligations to pay employees’ wages.”The
only thing that the filing of this bankruptcy does is change our
strategy a little bit, because our clients have strong claims both
inside and outside the bankruptcy,” said attorney Jason Bristol of Cohen
Rosenthal & Kramer LLP, who with Anthony Lazzaro is suing InkStop
and founders Dirk and Dawn Kettlewell.”It doesn’t affect the strength of
our claims,” he said.”The bankruptcy places more emphasis on
individuals (defendants) for how the employees were treated, especially
those who had control of the company and made the decision to keep
operating despite financial problems,” added Lazzaro, of the Lazzaro Law
Firm LLC. -
AuthorNovember 13, 2009 at 10:55 AM
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