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 user 2009-11-13 at 10:55:10 am Views: 79
  • #22919

    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

    Kettlewell could not be reached for comment.
    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.