Wells Fargo: Listworks Owes $3 Million
The March 22 motion for relief from automatic stay was filed with the U.S. Bankruptcy Court Southern District of New York in White Plains. Wells Fargo's motion will be heard April 7.
The Listworks Corp., Hawthorne, NY, closed Feb. 1 and filed a petition for Chapter 7 bankruptcy relief Feb. 18. It was founded in 1982, and it reportedly was purchased in 2003 by a group of investors and three employees, including Walter Monzi, who was president/CEO at the time of the closure, for more than $5 million.
The Chapter 7 filing guarantees Listworks an automatic stay from unsecured creditors, meaning that no lawsuits, foreclosure, garnishments or any other collection activities against it are permitted. However, secured creditors may file for relief from the automatic stay as Wells Fargo has done.
The motion details several loans made to Listworks in December 2002, including a revolving note with a principal balance of $745,522.46 and two term notes with principal balances totaling $1,662,500 as well as interest and fees. Wells Fargo said it is owed $3,029,660.28.
The document claims that Listworks has been in default of its obligations to Wells Fargo since Sept. 30. As a result, the filing states, "The Indebtedness is secured by all the Debtor's assets including but not limited to: equipment, general intangibles, inventory, accounts receivable, sums on deposit in any account, and investment property, including their substitutions, replacements, proceeds and accessions, as described more fully in the Credit Agreement."
On March 17, Judge Adlai S. Hardin granted approval for Listworks' trustee to retain auctioneer Henry A. Leonard & Co. Inc., Englewood, NJ, to sell the firm's assets at a public auction. According to the application, the assets include office furniture, equipment and a 2001 Ford Taurus.
In a letter dated Feb. 1 and filed by Wells Fargo as an exhibit with the court, the bank informed Listworks that its commitment was terminated and all obligations were due immediately. The letter also notified Listworks that Wells Fargo would try to collect the company's receivables from all its other creditors to be applied to its debt.
"In addition, you have notified us that salespeople responsible for a material percentage of the revenues of the Borrower have resigned or have given notice of their resignation, and that the Borrower will be unable to retain or replace the business formerly generated by these salespeople," Wells Fargo wrote in the letter.
Wells Fargo is likely referring to the departure of Lisa Greene and Frank Quaranta, who started Specialized Fundraising Services Inc., Spartanburg, SC, on Jan. 24 and took Greene's brokerage clients with them. Though Listworks' managed list properties were handled in its Hawthorne office, SFS also assumed list management of most of Listworks' nonprofit clients' files.
Calls to Wells Fargo's attorneys were not returned by deadline yesterday.
Earlier court documents revealed a list of 402 creditors including dozens of list companies, former clients and employees. It is likely that most of the debts owed these creditors are unsecured. A meeting for the creditors will be held April 12 at the court. The trustee, Eric C. Kurtzman, will preside.