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lion in shippers’ funds that were due
their carriers. And both companies,
and the monies that vanished with
them, aren’t coming back.
On June 14, just two months after
its April 15 bankruptcy filing,
Trendset, a 28-year-old firm that
processed 90 million invoices a year
worldwide, was acquired by AFS, a
Shreveport, La.-based firm, for the
fire-sale price of $1.1 million. The
transaction was handled under
Section 363 of the federal bankruptcy
code, which allows for an expedited
auction of firms with distressed assets.
filed for protection May 3 under Chapter 11
of the federal bankruptcy code. However,
on May 29, Alfred T. Giuliano, a trustee
appointed by a federal bankruptcy court in
New Jersey, asked to convert the case to a
Chapter 7 liquidation. According to court
records, Giuliano said TransVantage has no
funds to continue business and there is no
reorganization for him to propose.
According to documents, TransVantage
listed about $71.2 million in assets against
$41 million in liabilities. But $71 million
of that asset base is pegged to what is seen
as a highly dubious claim against its
largest creditor, industrial giant Johnson
Controls Inc. (JCI). JCI, for its part, sued
TransVantage, saying it was defrauded to
the tune of $17 million over a multiyear
period. The bankruptcy filing stayed JCI’s
petition, however. JCI has also lodged a
$15 million claim against TransVantage.
TRAGIC OUTCOME
The narratives seem torn from the scripts
of the popular cable television show
“American Greed.” At Trendset, shipper
funds earmarked to pay carriers were
instead allegedly used to fund lavish personal lifestyles of top executives, including its CEO. Court records show that
about $62.5 million of shipper funds due
their carriers were never paid.
At TransVantage, the scam involved an
alleged money float that went on for more
than two decades to conceal a perpetual
multimillion dollar balance sheet shortfall.
Its president, Shirley Sooy, seemed to be
unaware of the alleged deficiency until
2010, when she took over the firm upon her
husband’s death, according to court papers.
However, Sooy told employees at Ernst &
Young, which conducted an on-site examination of TransVantage, that the shortfall
existed as far back as the mid-1990s, and
that JCI’s funds were used from then on in
an effort to fill the hole, court records show.
Early in 2013, JCI was told by some of
its truckers that they weren’t being paid,
court records show. JCI, whose funds were
for years commingled with those of other
customers, then required TransVantage to
establish an account controlled by
Johnson, according to court records. At
that point, the scam began to unravel.
The cases are leavened with tragedy.
