TF lawyer-types

[ventman]

Does the concept of "fraudulent conveance" come into play with the ltest owrs plan?

[midtown]

How about "flatulent conveance"?

[Boli-Nica]

Does the concept of "fraudulent conveance" come into
play with the ltest owrs plan

I am only licensed in Illinois, so this would apply only in federal and in IL courts.
Accoprding to the US Bankruptcy Code in order to prove a fraudulent conveyance a party must establish that the debtor had interest in the property, that interest was voluntarily transferred within a year of filing the petition, and that the debtor received less than the reasonably equivalent value, and that the debtor was insolvent as result thereof.



the hardest part is proving that there was intent to defraud, and that the amount received was less than the reasonably equivalente value.

What the OWRS is receiving for their 2 million bucks is not much in term of assets, it is more the 'goodwill" of the company, and certain contingent contracts. Since the liabilities assumed under the contract are potentially large, and since the operation of the company will require significant investments to continue to operate, it is seriously doubtful that any Court would consider this to be evidence of a 'fire sale'.

Fraud: The fact that this Corporation has been over-scrutinized by the likes of anti-CART and pro-CART fans on bulletin boards like this, as well as by every magazine hack who covers open wheel racing, the past two years, is actually evidence that there was enough information to know what was going to happen. When there is that much information available to stockholders and creditors, judges are loathe to find any wrongdoing in a Corporation such as this one. Truth is a defense to fraud, that the facts were known by all the parties, including the stockholders makes for an extremely hard to case to prove, at least in my jurisdiction.

[Jim Wilke]

Truth is a defense to fraud, that the facts were known by all the parties, including the stockholders makes for an extremely hard to case to prove, at least in my jurisdiction.

If I were a stockholder, the first thing I would do is dig up all the public statements by Mr. Pook, the CEO, including one he made in late July that said in no uncertain terms that there was plenty of money to run a season in '04 if no buyer were found. He also said that CART would end the year with "$50 million, maybe less." Somehow, I suspect the average stockholder didn't think "maybe less" meant less than zero.

[tbyars]

B-N, perhaps I am missing something in your explaination. You stated that there were four conditions to fraudulent conveance. If I understood you correctly, then once those four conditions were proven, then an attempt to defraud is assumed as fact. Is that correct, or are there additional considerations.

If not, then, of course, you are right. The single tough thing to prove is that the amount received was less than the reasonably equivalent value.

However, we have a very recent proxy in which both parties had financial analysts agree, then try to sell to the shareholders, what was seen to be, at that time, reasonable value.

What has happened in the past 2 weeks to reduce the value of CART's real assets by 75%, especially since one of the assets coveted is CART's IP?

One argument for that, of course, is that OWRS, who helped to set that value in the first place, is no longer willing to pay that amount, so perhaps they can say that in itself devalued the property. I think that might be tough nut to sell, especially since OWRS is pressing CART to sell these assets prior to seeking bankruptcy.

It just seems to me that liquidating the property as a result of open bidding under the auspices of a bankruptcy judge is sure to bring far more than the OWRS $2M offer.

[dreamracer]

Originally posted by Jim Wilke
If I were a stockholder, the first thing I would do is dig up all the public statements by Mr. Pook, the CEO, including one he made in late July that said in no uncertain terms that there was plenty of money to run a season in '04 if no buyer were found. He also said that CART would end the year with "$50 million, maybe less." Somehow, I suspect the average stockholder didn't think "maybe less" meant less than zero.

Still, this doesn't come close to beginning to prove an [i]intent[i] to defraud.

With hindsight being 20/20, at its worst it only reveals that the CEO in question was extremely bullish (to an apparent fault) on his company.

[indycool]

Dreamracer, those statements are akin to Speedvis' "CART will be just fine" statements around here, except those statements from the CEO of a public company carry a legal implication.

One other item that can be challenged: CART announces 112,000 over three days at Cleveland. Where's the money? CART announces 75,000 over three days at Miami. Where's the money? Last year CART announces 81,000 over three days at Miami, then files a document with the City of Miami saying they had 14,000 paid and 12,000 freebies on race day, when the City of Miami asked, "where's the money?"

CART lost $9.5 million on self-promoted events in 2003. These attendance figures thrown around on cart.com are not in the category of, or under the umbrella of, "forward-looking statements." The money is there or the figures are lies. One way or the other, it's not a good thing.

[Jim Wilke]

Originally posted by dreamracer
Still, this doesn't come close to beginning to prove an [i]intent[i] to defraud.

With hindsight being 20/20, at its worst it only reveals that the CEO in question was extremely bullish (to an apparent fault) on his company.

There is a clear difference between being a cheerleader for your company and issuing statements that you know to be false.

Pook said that there would be enough money left to run a season in '04. Two weeks later, CART issued a statement that said this was clearly not the case. When Pook made his announcement, he was and still is CEO and a Director on the BOD. He had to know what he was saying was wildly inaccurate. That ain't right and it ain't legal.