PurchasePro Creditors, Investors May Get Money
Sep. 8–Thanks partly to a recent $4.25 million settlement, unsecured creditors can look forward to more payments from the estate of bankrupt PurchasePro.com, once a high-flying dot-com, said Greg Garman, the attorney for the bankrupt estate.
“We’re very close to paying the unsecured creditors in full with interest,” Garman, a Gordon & Silver partner, said.
If that happens, even the estimated 50,000 shareholders as of Dec. 31, 2004 may recover some of their investments in PurchasePro, he said. Garman warned investors that people who bought shares after that date are not entitled to recover anything. PurchasePro shares trade on the over-the-counter market and closed Wednesday at 5 cents. Before it filed for bankruptcy in September 2002, PurchasePro shares traded as high as $224 a share.
“PurchasePro as a company is dead,” Garman said. “The company is dissolved.”
Money he recovered through sale of assets and lawsuits will be paid to beneficiaries of a liquidating trust that Garman represents, including shareholders as of year-end 2004.
Time Warner, the successor to America Online, has agreed to pay $4.25 million to settle a lawsuit over alleged unjust enrichment of AOL and fraudulent transfer to AOL.
AOL promised to help PurchasePro develop new customers but failed to do so, although it received warrants to buy PurchasePro stock at discounted prices, according to the lawsuit. Time Warner did not admit to any wrongdoing in reaching the settlement.
Two lawsuits remain unresolved — one against former officers and directors of PurchasePro for breach of fiduciary duty and one against Gateway for breach of contact. Garman’s lawsuit accuses Gateway of failing to put icons on its computer monitors so customers could connect to the PurchasePro Web site. Also, he claims that Gateway failed to provide promised training.
Garman hopes to see the PurchasePro bankruptcy concluded soon.
“Certainly, we believe (the PurchasePro bankruptcy) will be wrapped up sometime next year,” he said.
Before its collapse, PurchasePro provided businesses with a place they could conduct auctions for needed supplies. In other cases, PurchasePro sold software to businesses so that they could conduct their auction.
Perfect Commerce of Lee’s Summit, Mo., purchased the assets of PurchasePro in 2002 and has since sold them .
There are federal criminal indictments against Charles “Junior” Johnson, PurchasePro’s founder and former chief executive officer, and others. They have pleaded not guilty to securities fraud and other alleged criminal offenses.
A criminal trial is expected in Alexandria, Va., sometime next year for Johnson; Joseph Michael Kennedy, former chief technology officer; Chris Benyo, former senior vice president of marketing; Kent Wakeford, former executive director of business affairs at AOL; and John Tuli, former vice president of the NetBusiness unit at AOL. Scott Wiegand, former senior vice president ant general counsel of PurchasePro, is scheduled to be tried in December.
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