Guild Plan Submitted; Gertmenian Out
Updated: Friday, April 25, 2008 7:34 PM
Posted: Wednesday, April 23, 2008 3:53 PM
Two days after the Jockeys’ Guild filed a formal plan of reorganization in its Chapter 11 bankruptcy, the U.S. Trustee overseeing the action dropped the group’s former national manager Wayne Gertmenian from the unsecured creditors committee.
The Guild, which filed for Chap. 11 protection last October, submitted its plan April 21 to the U.S. Bankruptcy Court’s Western Kentucky Division in Louisville. The plan needs to be confirmed by both the creditors committee and the court before going into effect.
“This is in the best interest of the riders and the organization as a whole,” said current Guild national Terry Meyocks. “And it will allow us to get back into a position where we can work with the industry, to help promote it in the best way we can.”
The Guild, which in November declared it was operating at a monthly capital deficiency of nearly $120,000, would under the plan retain certain income, including mount fees and track contributions, such as the estimated $300,000 Churchill Downs is expected to pay this year for jockey media rights.
Acting on behalf of 500-plus creditors who filed claims totaling just more than $3 million, the creditors committee would, in part, have the rights to certain account receivables the Guild declared prior to filing for bankruptcy, as well as certain litigation claims.
Erika Barnes, a Louisville attorney representing the creditors’ committee, did not immediately return a call seeking comment.
An attorney representing the Guild said she is hopeful in overcoming any potential objections from the creditors committee, which still includes two parties affiliated with Gertmenian’s tenure, attorney Lloyd Ownbey Jr., and the accounting firm of Piazza Donnelly Marlette.
“Typically, there are significant efforts to reach a consensus,” said Guild attorney Lea P. Goff. “I am hopeful we will be able to reach some sort of consensus. The Guild is anxious to move this along and emerge as a reorganized debtor.”
Gertmenian was deleted from the creditors committee by U.S. Trustee Richard Clippard in an April 23 court filing that only said the action was pursuant to the U.S. Bankruptcy Code section governing committee administration. Gertmenian has the largest claim in the Guild bankruptcy action, saying the group owes him $915,000.
U.S. District Judge David T. Stosberg, who is presiding over the case, said in a Jan. 29 hearing that he had concerns with Gertmenian’s presence on the committee.
“I do have concerns that the present makeup of the committee is chaired by someone who has a very significant claim and who was involved in the previous management of the company,” the judge said at the time.
Gertmenian was ousted from his post in November 2005 amid allegations of financial mismanagement, and was later sued in federal court by the Guild, which accused him of siphoning off $1 million from the group. The suit was later dismissed, but has been appealed.
Meyocks declined to comment on the decision to delete Gertmenian, citing the active legal actions. Still on the committee is another former national manager, Dwight Manley, who Meyocks replaced in September 2007; attorney Robert Cantore, who formerly represented the Guild; and retired Hall of Fame jockey Jerry Bailey, who is a former Guild president.
If the plan is approved, the Guild would have 90 days from the confirmation date to secure additional contribution contracts from racetracks, such as the one with Churchill Downs, and have those agreements protected by a new trust set up to distribute such funds for jockey benefits. After the 90-day grace period, any such contributions from racetracks could be assigned to the creditors committee.
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