By D.R. STEWART World Staff Writer on May 7, 2011, at 2:25 AM Updated on 5/07/11 at 5:06 AM
Proceeding
Patrick J. Malloy III: The Arrow Trucking bankruptcy trustee claims Arrow's lender continued lending money to the company to the detriment of other creditors.
A Utah bank and Arrow Trucking Co. bankruptcy trustee Patrick J. Malloy III have agreed to a proposed schedule of discovery leading to a 2012 trial of the lawsuit Malloy has filed against the bank, court documents show.
The proposed schedule, which must be approved by U.S. Bankruptcy Judge Dana L. Rasure, lists witnesses, exhibits and the anticipated subjects of testimony by experts and former employees of Tulsa-based Arrow, say documents filed in the case.
Malloy proposes to call three witnesses to establish that Transportation Alliance Bank of Ogden, Utah, Arrow's lender, knew of Arrow's insolvency at least 90 days before it filed its Chapter 7 bankruptcy liquidation petition in U.S. Bankruptcy Court in Tulsa on Jan. 8, 2010.
In his lawsuit against TAB, Malloy alleges the bank improved its financial condition during the 90 days before Arrow's bankruptcy filing while it continued lending money to the flatbed carrier to the detriment of other creditors.
Malloy proposes to call as witnesses:
- David Payne, an Oklahoma City forensic accountant with D.R. Payne and Associates Inc.
He will testify about Arrow's insolvency during the 90 days prior to bankruptcy, the improvement of TAB's financial position during that period and TAB's agreement with Arrow to purchase its accounts receivables. Payne is expected to testify that the agreement was a loan as opposed to a sale of receivables, court documents show.
- Darren Barnes, an accountant with Barnes & Barnes Inc. in Tulsa.
He is expected to testify about Arrow's insolvency in the 90 days before its bankruptcy filing and the improvement of TAB's financial position during that period, court filings say.
- Mike Dunlap, a former Arrow financial officer.
In addition to Arrow's insolvency in the last 90 days and the improvement of TAB's financial position, Dunlap is expected to testify about communications between Arrow and TAB throughout 2009 and TAB's audit of Arrow in 2009, court documents show.
TAB proposes to call 38 witnesses, court filings say. Among them are:
- TAB Chief Financial Officer Robert Boyd Hunter.
He is expected to testify about his evaluation of TAB's losses as a result of the alleged fraud of Arrow executives. Hunter also will testify about communications between TAB and Arrow executives and representatives, court documents show.
- Curtis Sutherland, TAB's director of accounts receivable finance operations.
He is expected to testify about his evaluation of damages from Arrow's alleged fraud and the mechanics of the fraud. Sutherland also is expected to testify about the assembly of a database of legitimate and fraudulent invoices, his supervision of efforts to collect legitimate invoices for mitigation of damages and site visits to Arrow, court documents say.
- Dan Sawatski, former manager of TAB's credit card division.
He is expected to testify about the use of TAB credit cards by Arrow and former Arrow CEO Doug Pielsticker.
- Michelle Bullard, former Arrow billing department employee.
He is expected to testify about the mechanics of the alleged invoice fraud, the beginning of the fraud, and individuals with knowledge of and participation in the fraud, court documents show.
- Sara Carter, Arrow's former director of pricing and contract administration.
She is expected to testify about unexplained rate variations in invoices, directives received from Arrow executives concerning the alleged fraud, conversations with former Arrow Chief Financial Officer Jonathan Moore about the alleged fraud and concealment of certain facts from TAB, documents say.
- Larry Bump, husband of former Arrow Chairman Carol Pielsticker.
"Mr. Bump is believed to have information regarding Doug Pielsticker's mismanagement of Arrow Trucking, including but not limited to the facts of the fraud against TAB gleaned from an independent investigation of Doug Pielsticker instigated by Mr. Bump," TAB says in court filings.
In a recommended scheduling order submitted to the court by TAB and Malloy, the two parties propose to conclude fact discovery by Sept. 15 and to conclude expert discovery by Dec. 31.
Malloy proposes to submit a proposed pre-trial order to the bankruptcy court by Feb. 1, court documents show.
On Jan. 8, 2010 - the same day lawyers for Arrow filed its Chapter 7 bankruptcy petition - TAB filed a lawsuit against Arrow and its top executives in U.S. District Court in Tulsa. It alleges Arrow submitted to TAB false invoices that defrauded the bank of at least $15.1 million.
Malloy's lawsuit against TAB alleges that transactions between Arrow and TAB were secured transactions, which would expose TAB to millions of dollars in trustee preference claims.
Malloy's preference claims are, essentially, legal motions to reclaim arbitrary transfers of money from Arrow to TAB in the 90 days before Arrow's bankruptcy filing - in accordance with Section 547 of U.S. Bankruptcy Statutes.
Malloy estimates Arrow's assets at $8.55 million and liabilities of $98.97 million.
D.R. Stewart 918-581-8451
don.stewart@tulsaworld.com
Original Print Headline: Trial plan reached in Arrow case
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