Xeno,
A few days ago SM signed off on another 30 day tolling agreement.
Metter's existing agreement was scheduled to expire tomorrow:
http://viewer.zoho.com/docs/paX42

Is it possible that Metter indicated that he was not inclined to "grant" another extension, forcing the DOJ's hand in seeking an indictment?

I'm primarily asking to try and confirm my understanding
of the legal process, apart from the logic or lack thereof of his decision if indeed he made it.

"Despite my extreme reluctance to foster another over-the-top idea"

Hey grongron!
It's not that over-the-top. It's a great idea......at least William Wesley thought so back in May.

http://iapps.courts.state.ny.us/iscroll/SQLData.jsp?IndexNo=650403-2010

ab,
re: "I was under the impression some of the information required in the requested court filings would also be included in the 10k and/or the Q’s (or other mandatory filings.)"

I did not mean to suggest that elements identical to those that appear in a 10X were not required in the initial court filings. Only that the 10X's include complete financial statements whereas the court filings deal primarily with assets, their liquidity and liabilities. The SEC and the bankruptcy court have different interests and serve different constituencies....investors vs creditors.

"SPNG's alter-ego VAEV gets small loan "

$120,000 seems like a small loan, doesn't it?
But if one does some rough math, even ignoring the 20% conversion discount, the ownership percentage that a conversion would create if transacted today is pretty amazing.

At today's pps of $.006, the principal amount converts to 20,000,000 shares. The last reported o/s(6/22) was 52,739,807.

Of course 27%+ of what is a whole nother question.

"We trust the shareholders who appeared in court last week will immediately file and fund a plan for the
company to end the bankruptcy case."

Ya think he really means it?

I'll bet he would've rather asked "Now what, geniuses?"


:o)

ab,
re: "Further, SPNG is now delinquent with requested court filings.(which include financials. The same financials management has had over 400 days to prepare)"

The court filings that were due on 7/23 do not include income statements and most of the income statement items (cost of sales, most operating expenses, depreciation, etc.) that would have been and are ordinarily reported as part of the 10K's and Q's.

Some of the required schedules are:
Schedule A - Real Property (12/07)

Schedule B - Personal Property (12/07)

Schedule D - Creditors Holding Secured Claims (12/07)
Schedule E - Creditors Holding Unsecured Priority Claims (4/10)
Schedule F - Creditors Holding Unsecured Nonpriority Claims (12/07)

Schedule G - Executory Contracts and Unexpired Leases (12/07)

Schedule H - Codebtors (12/07)


One of the more important and probably most challenging documents required is a Statement of Financial Affairs.
http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/BK_Forms_Official_2010/B_007_0410.pdf
I have compiled the items that the company is most likely to have to respond to....the form is designed for both individual and business filers so it includes a lot of stuff we don't care about. The form calls for certain information that might prove surprising.

1. Income from employment or operation of business
State the gross amount of income the debtor has received from employment, trade, or profession, or from operation of
the debtor's business, including part-time activities either as an employee or in independent trade or business, from the
beginning of this calendar year to the date this case was commenced. State also the gross amounts received during the
two years immediately preceding this calendar year.

3. Payments to creditors
b. Debtor whose debts are not primarily consumer debts: List each payment or other transfer to any creditor made
within 90 days immediately preceding the commencement of the case unless the aggregate value of all property that
constitutes or is affected by such transfer is less than $5,850*.
c. All debtors: List all payments made within one year immediately preceding the commencement of this case
to or for the benefit of creditors who are or were insiders.

4. Suits and administrative proceedings, executions, garnishments and attachments
a. List all suits and administrative proceedings to which the debtor is or was a party within one year immediately
preceding the filing of this bankruptcy case.
b. Describe all property that has been attached, garnished or seized under any legal or equitable process within one
year immediately preceding the commencement of this case.

5. Repossessions, foreclosures and returns
List all property that has been repossessed by a creditor, sold at a foreclosure sale, transferred through a deed in lieu
of foreclosure or returned to the seller, within one year immediately preceding the commencement of this case.

6. Assignments and receiverships
b. List all property which has been in the hands of a custodian, receiver, or court-appointed official within one year
immediately preceding the commencement of this case.

9. Payments related to debt counseling or bankruptcy
List all payments made or property transferred by or on behalf of the debtor to any persons, including attorneys, for
consultation concerning debt consolidation, relief under the bankruptcy law or preparation of a petition in bankruptcy
within one year immediately preceding the commencement of this case.

10. Other transfers
a. List all other property, other than property transferred in the ordinary course of the business or financial affairs of
the debtor, transferred either absolutely or as security within two years immediately preceding the commencement of
this case.

11. Closed financial accounts
List all financial accounts and instruments held in the name of the debtor or for the benefit of the debtor which were
closed, sold, or otherwise transferred within one year immediately preceding the commencement of this case. Include
checking, savings, or other financial accounts, certificates of deposit, or other instruments; shares and share accounts
held in banks, credit unions, pension funds, cooperatives, associations, brokerage houses and other financial
institutions.

18. Nature, location and name of business
If the debtor is a corporation, list the names, addresses, taxpayer-identification numbers, nature of the businesses,
and beginning and ending dates of all businesses in which the debtor was a partner or owned 5 percent or more of
the voting or equity securities within six years immediately preceding the commencement of this case.

19. Books, records and financial statements
a. List all bookkeepers and accountants who within two years immediately preceding the filing of this
bankruptcy case kept or supervised the keeping of books of account and records of the debtor.
b. List all firms or individuals who within two years immediately preceding the filing of this bankruptcy
case have audited the books of account and records, or prepared a financial statement of the debtor.
d. List all financial institutions, creditors and other parties, including mercantile and trade agencies, to whom a
financial statement was issued by the debtor within two years immediately preceding the commencement of this case.

20. Inventories
a. List the dates of the last two inventories taken of your property, the name of the person who supervised the
taking of each inventory, and the dollar amount and basis of each inventory.

21. Current Partners, Officers, Directors and Shareholders
b. If the debtor is a corporation, list all officers and directors of the corporation, and each stockholder who
directly or indirectly owns, controls, or holds 5 percent or more of the voting or equity securities of the
corporation.

22. Former partners, officers, directors and shareholders
b. If the debtor is a corporation, list all officers or directors whose relationship with the corporation terminated
within one year immediately preceding the commencement of this case.

23 . Withdrawals from a partnership or distributions by a corporation
If the debtor is a partnership or corporation, list all withdrawals or distributions credited or given to an insider,
including compensation in any form, bonuses, loans, stock redemptions, options exercised and any other perquisite
during one year immediately preceding the commencement of this case.

[If completed on behalf of a partnership or corporation]
I declare under penalty of perjury that I have read the answers contained in the foregoing statement of financial affairs and any attachments thereto and that they are true and correct to the best of my knowledge, information and belief.
Date
Signature
Print Name and Title


ps. I have absolutely no idea what recourse the court has for the failure of whoever is responsible at this point for not having filed the required documents on a timely basis. So I don't have any idea what incentive might exist for whoever is responsible to do so.

"Plus, I can't imagine that the US Trustee would let him just walk off the job and leave the BK to founder in the hands of former management."

You wouldn't think so.......that's exactly why I'm fishing around for some specifics.

That said, his mere presence doesn't provide him any authority once he has resigned. I think.

Yes, his attorney uses the phrase "intention to resign" in the notification to the court, but Hays himself announces "please let this serve as my formal resignation" in his letter to the US Trustee that appointed him.
The word "effective" doesn't appear in either document.
So we can either ASSUME that it's immediate as it would be in most circumstances in which a person announces his or her formal resignation or there may be precedent in the US Trustee/Chapter 11 Trustee relationship that calls for his remaining in place until a replacement is assigned.

We'll probably find out before we're done kickin' it around :o)

"it looks as if Hays will remain in charge until another is appointed."

pj,
that may be the norm, but I didn't see any wording that indicated that specifically. You did?

Stating that he is aware that the US Trustee is actively looking for a replacement wouldn't seem to be the same thing.

But it is a very important issue. I hate to ask, but who's in charge?

I suspect that his resignation letter, which was both clear and reasonable, should actually have said:

"Nuts to this. I'm outta here!"

Note that the list of things that the company is unable to fund didn't include what may have played a significant role in his resignation.......funding of the trustee.

08/03/2010 74 Notice of Withdrawal / Notice of Resignation of Trustee S. Gregory Hays filed by Christopher F. Graham on behalf of S. Gregory Hays. (Attachments: # 1 Exhibit A)(Graham, Christopher) (Entered: 08/03/2010)

Just for the record:
Back in January I expressed an interest in seeing an actual Wells Notice, given that the only reference to one that I had seen was in the 8-K filed by the company and it was unclear to me at the time as to whether it represented a "complete" Wells Notice as received by the company or merely a report of the receipt of a Wells Notice.
The SEC, in its recent response to Pensley's reply to their PI/Asset freeze motion, included his original Wells letter as Document 106-2.

I STILL don't know how to capture and reproduce a Pacer document, but Pacer subscribers can view it there.

The company provided a detailed listing of the alleged security laws violated in their 8-K.
Pensley's Wells letter did also.

The company's 8-K said "The recommended actions would seek, among other things, permanent injunctions and civil penalties."
Pensley's Wells notice was more specific:
"In connection with the contemplated action the staff may seek: (1) preliminary and permanent injunctions prohibiting future violations; (2) disgorgment of ill-gotten gains and prejudgment interest thereon (3) an accounting; and, (4) civil penalties pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act."


I obviously have not seen the original Wells Notices issued to SM, MM and Spongetech, so it's impossible for me to be certain that the 8-K did a soft sell on what the SEC indicated they sought therein…..you can guess that for yourself.
The company had no obligation to report the Wells Notice at all.

OT,
Can I get a mulligan on this?
Basically the DOJ has agreed with SM for a third time to "stop the clock" for a 30 day period, deferring the date by which the DOJ is required to file "an information or indictment".
The form provides 3 choices for the extension……plea bargain, trial prep or "fill-in-the-blank". Presumably the selected item is agreed upon…..both parties being required to sign the form.
Your most recent post says: "If the case is that much of a slam dunk (and it probably is), I couldn't understand why the FBI would waste their time plea bargaining with him, knowing in the end they wouldn't accept a plea bargain."
In an earlier post you said: "I was just thinking out loud as to whether it was ethically correct for the FBI to be in a plea bargain, knowing there was basically no chance they would accept it."

To say that the DOJ is wasting their time or acting ethically improperly based on a lack of intent on their part to actually come to an agreement assumes a lot. It would be a shame, and in my opinion highly unlikely, if you were right about that. If the case is a slam dunk it only increases the likelihood of a settlement and the DOJ has, or should have, an obligation to pursue the most efficient course to a just conclusion. To conclude from the "x" on the form that the DOJ is actually plea bargaining and doing so disingenuously doesn't make sense to me.

I know I'm repeating myself, but I'm convinced that if the form only had one choice, and that choice was "where's the fire, anyway?", both parties would just check the box and sign off to the same effect. So, while your if/then statement is logically sound, I don't think it comports with the facts and is probably moot anyway.

I know that you have a clear perspective on SM's activities and I'm sorry to have suggested otherwise. I was reacting to your words ("Unethical in the sense that they are giving Moskowitz the false impression") without proper regard for their context.

Sorry, OT.
I have always been uncomfortable with the idea that law enforcement can lie to someone in an interview while the reverse can have serious repercussions. But that seems to be the way it goes.
I just bristled at the idea that you stated your feeling that SM might be in the process of being taken advantage of.

But as to the specifics, the little check marks on that form are meaningless. They basically represent an agreement by the parties to waive the speedy trial rules for a month while they do other stuff. There is no real evidence of any plea negotiations and that check mark is a formality, not a commitment.

"Unethical in the sense that they are giving Moskowitz the false impression"

OT,
Allow me to humbly suggest that you read the above phrase over and over and over again until you realize that it might reflect how horrible it is to deceive someone who has relied on deception to fleece unwitting investors of millions.
Your compassion appears to know no bounds.

That may be so, but it still appears that he swapped out for collateral of roughly half the value and by no measure adequate to cover a $2,000,000 bond. It seems the process is done with a whole lot of winking and nodding, kind of like sentencing someone to jail for 90 days and letting them out in 13.

I can't get zillow to accept the address for some reason:

136-24 71st rd. Flushing, NY

Just a minor correction. Apparently the house is in his wife's name. So he substituted HIS WIFE'S house for his parents house.

Am I crazy to think that this provides him the um, opportunity, to head for parts unknown without unearthing mom and dad? He certainly wouldn't need his own house any longer.......besides, even from Google Earth altitudes it can't be worth 2 mill. I wasn't crazy when I got here, honest.

Ris, I'm a little surprised that you didn't mention that Mosko has reportedly told some people that the subsidiaries are holding $5million in cash that is immediately available.

Couldn't quite get the words out?

:o)

I'll believe it when I see it.
Finding an attorney to file it should be challenge enough all by itself.

I'm seriously undergunned to discuss this issue with a REAL lawyer, but I don't like to fish in a thunderstorm, so:

You state: "As adverse to the corporation yes, butt not adverse as to the creditors - which I believe is the appropriate test."

My initial reaction was:
I thought the law decided what the "appropriate test" should be? I mean, didn't attorney Whitley provide us with a verbatim citing from the law? And did it not indicate "nor shall the trustee have a direct or indirect connection to a party that holds a materially adverse interest to the debtor’s estate"? And wouldn't the obvious interpretation of that be that to the extent that a "connection" could be established between Hays and the SEC, the SEC has a material adverse interest to SPNG's estate in the form of their complaint and Hays fails the LAW'S test for a "disinterested person"?
After all, that's been my argument all along and who is this X person to decide what the "appropriate test" is in the face of the cited law.

Well, I learned a lesson.
I don't have any compunctions about Mr. Whitley's integrity......I've supported the uncompensated effort he's expended in his own interest and on the behalf of others. I've defended him based on those efforts against boneheads who questioned him in spite of his expression of a desire to help them. But I have not been able to confirm the wording of his citing.
Excuse me for repeating it:
"nor shall the trustee have a direct or indirect connection to a party that holds a materially adverse interest to the debtor’s estate."
HOWEVER, both of the following references use the wording that follows them:
uscode.house.gov/pdf/2006/2006usc11.pdf (does not link....use Google)
http://www.law.cornell.edu/uscode/html/uscode11/usc_sec_11_00000101----000-.html
(14) The term ‘‘disinterested person’’ means
a person that—
(A) is not a creditor, an equity security
holder, or an insider;
(B) is not and was not, within 2 years before
the date of the filing of the petition, a
director, officer, or employee of the debtor;
and
(C) does not have an interest materially
adverse to the interest of the estate or of
any class of creditors or equity security
holders, by reason of any direct or indirect
relationship to, connection with, or interest
in, the debtor, or for any other reason.

The ONLY way that Mr. Whitley's "citing" implying that Hays' connection to the SEC precludes him from being a disinterested person would be under the "for any other reason" clause, because Hays certainly "does not have an interest materially adverse to the interest of the estate or of
any class of creditors or equity security holders". He obviously has no "relationship to, connection with, or interest in" Spongetech. And the law does not deal with his disqualification due to any "connection" that he may have with any other party (eg. SEC) that does have a material adverse interest.

Thank you for putting me through this.
Lesson: Believe half of what you hear and all of what you see.

ps. I know Mr. Whitley reads this board occasionally and I would welcome a source for his citing if he notices this and is so inclined.

He reiterated the concept of value (I don't recall if he specifically restated the presence of cash) in the 6 subsidiaries in the hearing. He also stated that there are 11 trademarks (I checked, appears correct) and suggested that there are people clamoring to license them, thereby providing a ready source of funds. (I swear I think I heard him say that Vanity was one of those potential licensees!).The underlying theme being that he was feeding fund raising ideas to Hays left and right and none were being given adequate consideration. Damn that Hays, anyway.

It was the first time I ever heard him speak and I admit to being a little confused. I didn't always see a segue that connected the issues and the judge pretty much let him have at it without interruption. I suspect that it wasn't the first time that this judge was addressed by a company officer in SM's position (arrested and essentially deposed from a power position in a failing enterprise) and he probably learned a long time ago to just let 'em talk. Now I want to go back and listen again. Damn.

The Petition
Your Honor,

We the shareholders of SpongeTech Delivery Systems hereby request that you DEMAND that the financials of SpongeTech Delivery Systems and ALL of its subsidiaries be submitted to the court immediately. Mr. Moskowitz has told many shareholders that there is money being held by the other 6 subsidiaries. Why the SEC is not asking for these themselves should raise some concerns on your behalf.

Also we request that you demand a full and accurate share count of all outstanding shares. This will show Your Honor that the naked short selling we talked about DOES exist.

Having the information listed above is the ONLY way for ANYONE to know exactly where SpongeTech stands, financially speaking.

Your Honor, if you do not make these demands you are effectively signing off on the demise of SpongeTech and the loss of millions of dollars investors have made in the company. We see absolutely no reason whatsoever why this cannot be done before the trustee or the SEC can make another move to destroy the company. If you so order it.

pj,
Except it doesn't apply because the judgment, assuming there is one, wasn't a debt at the time the bankruptcy was filed.

As in this case, Worldcom filed bankruptcy after the SEC filed their complaint. Subsequently, per the link that you provided:
"That proposed settlement further provided that, as a result of the company's pending bankruptcy case, the Commission's judgment would be satisfied by WorldCom's payment, after review and approval of the terms of the settlement by the Bankruptcy Court, of $500,000,000."

"it shows the sec fines or sanctions are not exempt and are collected by the SEC from the corporation .."

What it shows is that the judgment is subject to the terms of the bankruptcy settlement.

Now, my question is, was and forever more shall be pending an intelligent response, where does the payment of that judgment fall? Ahead of, behind or as one of the previously provided classes of creditors?


Creditors Holding Secured Claims
Creditors Holding Unsecured Priority Claims
Creditors Holding Unsecured Nonpriority Claims

"I don't see where "materially adverse" is defined. "

And I don't see where that question comes from.


"A wild thought, but does "the law" *assume* the SEC is an "adversary" merely by filing suit?"

Hardly a wild thought. The filing of the suit DEFINES the SEC as an adversary.

"this goes to prove cash damages are not exempt from bankruptcy !!"

I never said that cash damages are exempt from bankruptcy. I don't even know what that means.

"I wonder if there is any precedent establishing whether a working association with the SEC/other governmental agency is acceptable/unacceptable?"

Mr. Whitley cites 4 sections of the law and around a dozen different cases in his brief to the court:
http://viewer.zoho.com/docs/gqq9e

I assume a couple of those cases are on point in terms of that issue, but I don't have a Westlaw or whatever subscription one might need to research that. If so, the judge will have to make his decision based on them. Unless of course the US Trustee's office files something citing precedents that have the opposite interpretation.

Lube up your recliner.

All good points.

1. Just as Pike was once thought to have seen things that the rest of us couldn't (Wrong!), maybe this guy is seeing things, too. But he apparently has a hands-on background that Pike didn't. The only thing that would make any sense is if he had an eye toward some kind of control. But you're right, his judgment is suspect......he really does SOUND good, though :o)

2. Makes too much sense. Leaves little room for lawyerin'.

3. I agree.....I wouldn't think it was an unusual relationship. That said, I'm not so sure that that's a good thing. What we are saying is that what we feel is an acceptable practice appears to be contrary to the letter of the law.
As cited by the pro bono attorney:
"In order to satisfy the "disinterested party" requirement to qualify as a trustee for a particular estate, the trustee must hold no interest materially adverse to the debtor, to a particular class of creditors, or equity holders, nor shall the trustee have a direct or indirect connection to a party that holds a materially adverse interest to the
debtor’s estate."
The argument that is being made is that the SEC, as plaintiff in the complaint they filed, is a party that holds a materially adverse interest to the debtor’s estate. And that Hays' history represents a "direct or indirect connection" to them. And apart from the argument that "everybody's doin' it" I don't know how to refute it.

"Plus the SPNG liabilities listed don't include the shareholder suits, SEC fines, and whatever other stuff Mosky has been sweeping under the rug and hasn't surfaced yet."

Agreed. It sure seems insurmountable to me.
And in spite of my last post regarding the relative strength of the pro bono attorney's argument regarding the "relationship" between Hays and the SEC, its kind of goofy to think that any Trustee that has any decent amount of experience wouldn't have a similar relationship.

That's unfortunate.
I just started listening to the second piece of tape provided in the file. If you do get access I encourage you to listen to the first speaker before you listen to anything else. I didn't hear an identification, but I'm quite certain based on a few of the things he said that he is Robert Greenberger.
Background:
RG was first referred to, although not by name, by Furth in his letter to the court in terms of providing DIP financing. In Pike's attorney's letter to the court he asks for
"An explanation of any knowledge that the Trustee has of a post-petition loan made to the Debtor by Robert Greenberger, as alleged by Mr. Greenberger in his July 22, 2010 letter to the Court (D.I. 58), including the amount of such loan, the intended use of proceeds, any security granted to Mr. Greenberger to secure the loan and the term of such loan."

RG, in his letter to the court and in his remarks at the hearing states that he has many years of work experience in an environment similar to SPNG's in terms of a manufacturer selling consumer stuff to large retailers. He sounded very sharp to me and offered the following, in my words.....not his.
1. Given the current status of things vis-a-vis unpaid employees, lapse of insurance, loss of leases and licenses, etc. for the judge and the Trustee to be asking about this purported $100,000 of orders that SM vouches to be in existence is silly. He contends that the mere fact that the Trustee entertains the possibility that such orders could be shipped and paid for in time to provide the needed short term liquidity is a sign of his lack of real world operational issues.
2. He recounts a phone conversation with the Trustee and attorney Sewell, which was cut short and which he was unsuccessful in his attempt to restore, wherein he got the impression that the trustee had a "preconceived" notion of the direction this process would take.
3. He acknowledged his strong disapproval in the company, presumably SM, not providing financials. He did say that they provided "some things" and that he had signed a non-disclosure agreement. He did not discuss these things with the Trustee because he wasn't sure what he was allowed to say.

My own feelings notwithstanding, he made the clearest practical argument against the Hays appointment. Both he and the Brown Rudnick attorney, speaking as a creditor (not on the behalf of MSG, as stated elsewhere) were clear in their feeling that Hays' background had a strong emphasis on the liquidation process vs the operation with the hope of re-organization process. They did not pussyfoot around that issue.

Here's the issue for me.
It is the US Trustee's duty to appoint a Chapter 11 trustee once the court has determined that one is needed. That appointment has been made. The judge has been asked to determine whether the selection was proper.....keeping in mind that the priority is supposed to be the best interest of the CREDITORS.
Here's where the practical arguments presented above come into play. Theoretically, the judge has to make his decision based on the relatively simple issue of whether Hays is a disinterested party in terms of his relationship with the SEC (And I thought the pro bono attorney made a pretty good argument that Hays had a conflict based on his reliance on the SEC for the current, past and potential future referrals). If the judge decides that Hays qualifies as "disinterested", can he then go to the issue of his historical bent towards liquidation as a reason to remove him? This puts the judge in the position of having to weigh the operational prospects of the company in the total absence of any reliable financial data. I don't think he can do that.

Just to be sure, this is the link:
http://dl.dropbox.com/u/9618487/SPNG%20Hearing.zip

I just checked it and apparently rather than being "disabled" it is suffering from too much traffic.


FWIW, the format was that of a hearing. No one got 2 bites at the apple so far as I heard in terms of rebutting the statements of another speaker after they themselves had spoken. The judge asked questions of speakers occasionally, but never in the form "But the other guy said...". I'm under the impression that Hays never intended to speak....the lawyer that spoke on his behalf was clear,thorough and first to speak. He could not have anticipated all the stuff that SM got into, much of which was operational, relating to Dicon and hard for me to follow.

Based on a summary provided "elsewhere", after SM spoke the podium was turned over to shareholders for their comments.

"and the SEC penalties, sanctions are still in effect for spng not protected by the BK .. "

The judicial process is not stayed and you and I expect there to be monetary penalties flowing from that process. However, the payment of those penalties does become a claim in the bankruptcy. I asked the board for comment as to how that claim would be prioritized and the damn crickets came out again.

There are 3 types of claims, as I understand it. One of these days they'll get around to filing these:

Schedule D - Creditors Holding Secured Claims (12/07)
Schedule E - Creditors Holding Unsecured Priority Claims (4/10)
Schedule F - Creditors Holding Unsecured Nonpriority Claims (12/07)

http://www.uscourts.gov/FormsAndFees/Forms/BankruptcyForms.aspx

pj,
"At this point is the $11 million in liabilities based only on Mosky's #s, or has the Trustee confirmed that number?"
This is from the Trustee' First Interim Report:
"8. Accounts Payable.
Spongetech advises that there are approximately $11,800,000 in outstanding, pre-petition
accounts payable. The Trustee has not verified the amount of pre-petition unsecured claims."
http://viewer.zoho.com/docs/hchi4

Just as Spongetech provided the above advice, starfire provided the following extrapolation:
"So there is min 2+ million in liabilities...max could be $3Million".

"have we only Mosky's word that much of the sports related liabilities are cancellable, or has that been confirmed by the Trustee?"
This is from my post:
"Moskowitz claims......"

I selected the word "claims" carefully. He also said that the contracts establishing that claim have been provided to the Trustee. SM was still yapping, er speaking, when I stopped listening, but I'm under the distinct impression that Hays 1)did not speak at the meeting and 2)neither he nor his attorney were offered or exercised an opportunity to rebut any of his statements.



If I have the time and inclination to listen to the second half and any of the above changes, I'll post it.

Just listened to the first half of the court testimony from Thursday. The first speaker, who I believe is the NY attorney hired by Hays, says about 25 minutes in that the $6million note held by Spongetech represents an obligation of Moskowitz, not Metter.
I believe he misspoke, but that's what he said based on a rewind and second listen.

Moskowitz claims that $9million+ of the $11million in liabilities is represented by sports-related contracts and a large portion (I don't recall if he was specific) relates to future periods which are subject to cancellation.

z,
That's more ironic than you think.
It was in my last venture into penny stocks, where I did get singed pretty badly, that I learned the value of REAL due diligence. That experience allowed me to avoid investing here. So your analysis is one scam late.
You may rest assured, in the totally unlikely event that a drama as interesting as this one turns up in the future, that I'll try and be there to help YOU out.

Not confused at all.

And for the first time I could find little with which to disagree.

For confusion, see:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=52837905

Facts:
A. In 2006 BC Media loaned Business Talk Radio $5.5million.

B. MM, FL and two others unconditionally guaranteed payment of the loan.

C. BTR defaulted and in October of 2008 the Court said that the Guarantors were obligated.

D. On 6/1/2009 BC Media and the Guarantors came to an agreement wherein the Guarantors would pay $6million in total according to a schedule that called for a payment of $2million immediately and $1million on the first of each month through October 1.
(Based on a filing made by Map VI Acquisitions (MM CEO & FL Director) who, and I believe this is noteworthy, was not a party to the settlement agreement):
http://www.sec.gov/Archives/edgar/data/1393934/000114420409035551/v153861_ex10-4.htm

E. On 6/25/2009, as reported in the same 8-K that carried the above agreement as an exhibit, Map VI filed a loan agreement whereby Map VI borrowed $6million from RME (no introduction needed).
One of the terms of that agreement was:
"1.2 The proceeds from the Loan shall be used solely for the payment of funds to BC Media Funding Company II, LLC and Media Funding Company, LLC as lender parties under that certain Agreement of Settlement and General Release dated as of June 1, 2009 (the “Settlement Agreement”)."
One of the terms of the note itself was:
"(1) PAYMENTS OF PRINCIPAL. On the Maturity Date, unless an Event of Default shall have sooner occurred, Borrower shall pay to Lender, in cash, the entire principal amount under this Secured Promissory Note (this “Note”) plus all accrued and unpaid interest. The “Maturity Date” shall be June 25, 2011. Borrower may prepay all or any portion of the amounts owing under this Note at any time without fee, charge or premium."



RME is privately held and Map VI (Now re-named Blue Star Media), while it was a public company until January of this year when it filed a Form 15 signed by MM, has not filed any periodic reports since its 12/31/07 10K. So we don't know if RME has received any payments on their loan to Map VI.
We do know by court documents that "By the beginning of October, 2009, the Defendants had paid $5,000,000 of the $6,000,000.00 settlement. A dispute arose as to the payment of the final $1,000,000."
I'm sure BC Media doesn't care who paid them, but the question remains "What justifies the series of transactions that resulted in Map VI borrowing funds from RME in order to pay a settlement based on the guarantee of affiliated individuals of both companies of a loan made to Business Talk Radio.net?"

And I know it's been a bumpy ride, but the real question is "Does this have anything at all to do with the $6million note due from a "former insider" that is held by Spongetech?"
If so, it's hardly a surprise that "The Trustee is attempting to collect amounts due under this note but cannot verify, as of the date of this report, whether the note is collectible or
not."
If not, I think it's still pretty funny.


ps. I have intentionally left the following out of the above because I believe it would only serve to confuse the issues discussed, which I believe remain substantially unaffected:
"On February 4, 2009, Map VI Acquisition, Inc. (the “Company”), Businesstalkradio.net Acquisitions Corp., a wholly-owned subsidiary of the Company (“Acquisition Sub”), and Businesstalkradio.net, Inc. (“BTRN”) entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), which closed on February 4, 2009 (the “Closing Date”). Pursuant to the terms of the Merger Agreement, Acquisition Sub merged with and into BTRN, which became a wholly-owned subsidiary of the Company (the “Merger”)."
http://www.sec.gov/Archives/edgar/data/1393934/000114420409044997/v158288_8k-a.htm

"Hey, if the sporting teams and venues that got the bad checks were so sure of their positions, why havent they filed their claims yet? only one has to my knowledge"

It's kind of odd that the debtor lists over a dozen of them on its top 20 list. I suppose that it's possible that the debtor thinks they owe them the money and the creditors don't, but it sure doesn't happen often.



I thought I recognized that 'tude.
Gold star, Ris.

"Upon being advised by counsel that the reported number was 2.99 billion+ OS, the statement Steve made in his February affidavit indicated that he was "inexplicably advised" of this OS total. "

The statement "Steve" made in his February affadavit indicated no such thing. Spongetech's counsel sent CRESTA'S ATTORNEY a letter indicating that there were only 15,050 shares remaining available for issuance and he stated in HIS affadavit that HE was "inexplicably advised" of same.

You may rest assured that "Steve" was well aware of that fact and found it in no way inexplicable. For him, it was all too explicable.