Mal Dunn hearing Sept. 24
The application for the Mal Dunn Associates Inc. Chapter 11 bankruptcy proceeding is scheduled for court on September 18. New York Putnam County Court Judge Cecelia G. Morris reviewed the application and set the court date.
This case began when Stephen T. Dunn, president/CEO, filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on August 24. Dunn spoke with DM News on August 23 about the filing, expressing the hope that the company's insolvencyáwas temporary. Chapter 11 allows for a reorganization of a company.
"We do not want to close our doors," Dunn said. "Rather, we are continuing to operate and work toward the best interests of our creditors. We will continue to offer all of our services to a select group of special clients. We want to keep it intact and grow it."
Dunn added that his objective was to retool the company into a data aggregation and database operation. He said the staff layoff process had been completed, and that there would be no senior management changes.
Recent calls both to Dunn and Dunn's lawyers, David L. Barrack and Scott T. Dillon of Fulbright & Jaworski LLP, were not returned in time for press.
According to court documents, Mal Dunn has no secured creditors, and therefore no secured debt. The company's unsecured debt includes $7,895,999 in accounts payable to trade clients; $386,307 in accounts payable to production clients; and $168,965 in commissions payable. For an extended list of Mal Dunn creditors, see www.dmnews.com.
In his affidavit to the court, Dunn said that the deterioration of his business can be attributed to multiple causes: the advent of the Internet; changes in postal rate and mailing size structures; and rapid consolidation, which left his competitors much larger and better capitalized.
"Hence, Mal Dunn lost customers based on price reductions and [the] stealing of list brokers and their customers with offers of better compensation packages," Dunn wrote in his affidavit. "These issues had a less substantial effect on Mal Dunn's third business line, its database business. Recognizing the changing market, Mal Dunn sought to grow its database division, while bringing the list broker and list management business to a conclusion."
Prior to filing for Chapter 11, Mal Dunn made efforts to find an investor, partner, sale or merger, but was not successful.
The offer's terms - on the part of Mal Dunn - are in a term sheet and asset purchase agreement, and included a cash consideration of $200,000, assumption of payables in the amount of $840,000, forgiveness of debt of $600,000, offers of employment to approximately 30 employees, assumption of executive contracts, leases and license considerations, which are valuable to the company.
"Hopefully, the bankruptcy auction process will convince other interested parties to bid," Dunn wrote.
Mal Dunn requested the court approve retention of Buchwald Capital Advisors and its principal, Lee Buchwald, to oversee the auction process in a manner similar to an investment banker. The court has not yet responded to the request.