HLNT/NIR/Walters suits:
What does Ribotsky's resignation mean?
Ribotksy's resignation was a 30 day notice. Most likely, his lame duck status will be one in which he tries to make sure that there is as little evidence of any wrongdoing left behind, if he has the chance. If Price Waterhouse really does have full access to the records of NIR at this time, then there will be a quick but thorough review of as much documentation as possible to determine if there has been any further wrong doing by Ribotsky and other employees of NIR. Should any be turned up, then it will of course be forwarded to the Department of Justice.
What to expect in terms of the lawsuit?
Over the next 30 to 45 days, PWC will be reviewing all notes and other investments of NIR for the purposes of liquidation. For those notes that are valid and collectible, PWC will sell them off at a discount to facilitate the liquidation. For those notes that are uncollectible, PWC may try to attempt some kind of settlement offer with the funded company, or go through a deeper discount to get rid of such notes, or write them off completely. For those notes that are in litigation, PWC will sit with the lawyers for NIR and get a thorough briefing on the realistic status of the cases, including the chances of winning, and the risks of losing. To keep the litigation ongoing may be an option in some of the cases, if there is the potential of a very short time frame and a practically guaranteed favorable settlement for NIR. If there is not, then PWC will go for a less than favorable settlement in order to protect NIR Investors from any further drains on whatever the PWC can collect from the liquidations for the NIR investors (and PWC's own fees). To not do so would mean that they (PWC through NIR) would have to set aside an amount for any settlement, in order to avoid getting themselves tied up in litigation. Of course, PWC will not want to reserve any funds for settlements, so they will be pushing for a quick settlement in all legal cases, including HLNT's. Because of this, HLNT needs to be prepared for a quick settlement and know what it is they want from this. This would include the complete forgivness, of HLNT for any notes not transferred to Walters, in exchange for the exclusion of NIR from any Counter Claims and Third Party Action that derive from the Fraudulent Notes Transfer Agreement. In addition, HLNT would want any information that further defines Walters complicity in the Fraudulent Notes Transfer Agreement.
The time frame for this may be as much as 45 to 90 days.
What does this mean for Walters?
The term "bagholder" comes to mind. With Humphries having filed a Chapter 7 Bankruptcy, and NIR to go into the process of being totally liquidated, that leaves Walters on his own to fight HLNT. If there is any possible assistance to be gained from the Feds or PWC with information that would serve to further define Walters role in the Fraud, his chance of getting a favorable decision from the Arbitrators goes out the window, and that chance is already slim as it is. Should HLNT be able to get the case out of Arbitration and into California District court (the odds of this have improved with Ribotsky's resignation), look for Walters to go for a settlement, offering to cancel the Notes in Texas and the return of the HLNT stock (he and his companies still have) as bargaining chips in the settlement.
What does this mean for HLNT?
Given a list of major and minor events, such as EPA verification, Fleet Contract, HOSS Approval, etc, the NIR lawsuit was the most important factor affecting not only the PPS, but HLNT's ability to secure contracts and make deals as well. Any news put out by HLNT simply did not have the impact on the PPS that was expected, and what should have been a bigger and stronger run often had a limited impact. With regards to contracts, there is no doubt that potential customers would be concerned as to whether or not HLNT would continue to survive should they lose the Lawsuits. The understanding that HLNT will weather the suit is now going to filter out into the public, and the worries from clients and investors will begin to ease as more news comes out that will be favorable to HLNT. This understanding should begin to be seen in both the PPS and in the removal of difficulties that HLNT has had to face in the marketplace.
The opinions expressed herein are my own and all investors should do their own due diligence and make their own investment decisions accordingly.
AI
