By D.R. STEWART World Staff Writer on Sep 29, 2011, at 2:28 AM Updated on 9/29/11 at 3:29 AM
A proposed $450,000 agreement has been reached to settle outstanding claims between the Arrow Trucking Co. bankruptcy estate and former Arrow Chairwoman Carol Pielsticker Bump, court documents show.
The proposed agreement was negotiated by Arrow bankruptcy trustee Patrick J. Malloy III and Bump's lawyers, Joel L. Wohlgemuth and Sidney K. Swinson, both of Tulsa, and it must be approved by U.S. Bankruptcy Judge Dana L. Rasure.
The agreement was crafted to settle claims arising out of Arrow's bankruptcy filing on Jan. 8, 2010.
Malloy estimates Arrow's assets at $8.55 million and its liabilities at $98.97 million.
If the judge approves the proposed settlement, Bump has agreed to pay the Arrow bankruptcy estate $320,000 in cash within 10 days, court documents say.
Additionally, Bump has agreed to relinquish her security interest in $149,450 of proceeds from the sale of Arrow property on behalf of the estate by an auctioneer on June 15 and 16, 2010, court records show.
Malloy has determined that $130,000 represents the value to the estate of Bump's interest in the auction sale proceeds after deducting the auctioneer's commission, court documents say.
"This agreement was reached through mediation with the United States magistrate (Judge Paul J. Cleary)," Malloy said. "The motion speaks for itself."
In January, Malloy filed suit in U.S. Bankruptcy Court in Tulsa against Bump and her son, former Arrow CEO Doug Pielsticker.
Malloy's lawsuit seeks to reclaim at least $12.8 million from Bump and Pielsticker, alleging they fraudulently transferred the Arrow assets for their own use in the four years before Arrow filed its Chapter 7 bankruptcy liquidation petition.
The trustee's lawsuit alleges Bump received $4.4 million in fraudulent transfers and Pielsticker received $8.4 million in fraudulent transfers in the four years before the company's bankruptcy filing.
The settlement agreement reached between Malloy and lawyers for Bump does not resolve Malloy's claims against Pielsticker, court officials said.
About $4 million of the allegedly fraudulent transfers to Bump "were disguised as 'salary' when, in fact, Carol was neither employed by Arrow nor did she provide any services to Arrow, and the transfers occurred shortly before or after Arrow had incurred substantial debt," Malloy's lawsuit says.
In her answer to Malloy's lawsuit, Bump's lawyers alleged that Arrow was solvent at the time of all or most of the transfers and that Bump did not have fraudulent intent when making the transfers. Bump also lent about $7 million to Arrow over the four years prior to the bankruptcy filing, the former chairwoman's lawyers said in court filings.
In his motion for approval of the proposed settlement, Malloy said it is in the best interest of the bankruptcy estate and interested parties.
It is "fair and reasonable under the circumstances," Malloy says in his motion, and the proposed agreement was reached after court-ordered settlement conferences between the parties.
"With respect to the issue of collectability, the defendant (Bump) has provided the trustee a sworn financial statement that reflects limited non-exempt liquid assets that could be used to satisfy any potential judgment taken against her," Malloy says in his motion. "Especially in light of defendant's limited, non-exempt assets (which are significantly less than the cumulative damages alleged here and in other litigation), a prompt settlement is most likely to benefit the debtor's estate.
"In light of the defendant's defenses, the cost of litigation, and the costs and expenses of an appeal of any judgment and related post-judgment delays and risks (including the trustee's likely inability to collect on any judgment obtained), the trustee believes that the settlement agreement and release is reasonable and well within the range of reasonableness."
If the bankruptcy judge approves the proposed settlement, it would not end Bump's legal battles related to Arrow's bankruptcy, court documents show.
On the same day Arrow filed for bankruptcy, Transportation Alliance Bank, Arrow's former lender, filed a lawsuit against Arrow and its top executives in U.S. District Court in Tulsa. That lawsuit is scheduled to go to trial in April.
TAB's lawsuit alleges the company submitted to TAB false invoices that defrauded the bank of at least $15.1 million, court documents show.
During mounting financial problems leading up to Arrow's bankruptcy filing, company executives canceled directors' and officers' liability insurance, which would have covered most legal claims against them, court documents show.
D.R. Stewart 918-581-8451
don.stewart@tulsaworld.com
Original Print Headline: Agreement reached in Arrow case
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