Continental Information Systems Inc, which had filed for bankruptcy on January 13, 1989, is about to emerge from a lengthy and complicated ordeal. If his reorganisation plan is approved today, Jim Hassett, the company’s trustee, will step down in favour of new management. The transition process is expected to take a few months. The new […]
Continental Information Systems Inc, which had filed for bankruptcy on January 13, 1989, is about to emerge from a lengthy and complicated ordeal. If his reorganisation plan is approved today, Jim Hassett, the company’s trustee, will step down in favour of new management. The transition process is expected to take a few months. The new chief executive officer of CIS will be Richard J Lasken, formerly president of AT&T Commercial Finance. David Wieneke, who has been with CIS since 1992, will be general counsel. James Mosher, with CIS since 1980, will be controller. They will run a company with assets of about $30m, according to documents prepared by trustee Hassett, and very good prospects for future growth. Judging from the elements of a business plan included in the CIS reorganisation documents, the lessor is expected to have revenue of over $40m during 1995 and turn a profit of nearly $1m. Hassett, who ran CIS and enabled it to emerge from bankruptcy, became famous in the computer leasing industry several years ago when the Federal Bankruptcy Court in New York appointed him trustee of OPM Leasing. That job involved sorting out a massive fraud as well as a stupendous business collapse. Hassett’s work was widely recognised as excellent and his voluminous report on the salvage job makes interesting and informative reading: it was so popular among lessors and lawyers that OPM repeatedly had to produce additional batches of the book, which it sold. The CIS bankruptcy was not the result of crime. Its causes were more mundane: ambition, incompetence, greed and just a bit of chicanery on the part of the company’s prior management. And Hassett’s role – conserving the estate – which often pitted him against other lessors, against IBM Corp and against the creditors of the ruined company, made cordial relations between the trustee and erstwhile admirers in the business community impossible. The more brilliantly Hassett managed the CIS estate, conserving its funds at the expense of creditors, the more enmity he earned from his legal adversaries.
Nonetheless, even Hassett’s most vocal critics remain sincere, if grudging, admirers of his skill and determination. One of the most impressive examples of Hassett’s work (and a testimony to the power that US bankruptcy laws gives to a trustee) is the settlement between CIS and IBM. When CIS filed its Chapter 11 petition, one of the largest claims was that of IBM, which came to just under $37m. When all the smoke cleared, IBM settled for $2,750,000. IBM admits to spending $2m wrestling with Hassett, meaning CIS got $35m in IBM hardware for $750,000. For his efforts and the sacrifice of the easy relations with leasing industry colleagues he enjoyed while at OPM, Hassett will be paid a bit over $8m. He has already received $1,650,000 of this amount. Although we expect to hear some carping about Hassett’s compensation from lessors with whom he had business disputes, the amount Hassett will receive is well under the $39m ceiling – 3% of the total amount distributed to creditors – that the law allows. However, that ceiling for payment to a trustee is more applicable in smaller bankruptcies. – Hesh Wiener
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