PDF contents re: approved sale of VB/LE and MadPackers from today's court docket entry, compliments of xray on another board. So far I haven't seen anyone post anything about the exhibits mentioned:
01/04/2008 271 MOTION to Approve Sale Of Subsidiaries Of Universal Express, Inc.. Document filed by Jane W. Moscowitz. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Moscowitz, Jane) (Entered: 01/04/2008)
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Doc 271
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
________________________________________________
U.S. SECURITIES AND EXCHANGE COMMISSION, :
:
Plaintiff, :
:
v. : 1:04-cv-2322(GEL)
:
UNIVERSAL EXPRESS, INC., et al., ::
Defendants. :
________________________________________________:
MOTION TO APPROVE SALE OF SUBSIDIARIES OF UNIVERSAL EXPRESS, INC.
Jane W. Moscowitz, as Court-appointed Receiver of Universal Express, Inc. and its subsidiaries (the “Company”), hereby moves for the Court’s approval of its sale of the assets of three of the Company’s subsidiaries, Virtual Bellhop (“VB”), Luggage Express (“LE”) and Madpackers (“MP”). In support of this Motion, the Receiver states:
On August 30, 2007, the Court issued its Opinion and Order (DE#202) and on August 31, 2007, its Order appointing Jane W. Moscowitz, Receiver of Universal Express, Inc. and its subsidiaries (DE #203). An amended order was signed by the Court on September 10, 2007 (DE 204-2). The two Receivership orders set forth the Receiver’s duties and powers. Pursuant to that Order the Receiver is entitled to “liquidate any . . . assets as the Receiver deems to be advisable or necessary.” Point I.f.
The Receiver has been engaged in evaluating Universal Express and its subsidiaries, as more fully reported in the two reports filed with the Court, the contents of which are incorporated herein.
As part of that evaluation, the Receiver investigated the business of VB and LE. These businesses were engaged in shipping travelers’ luggage to their destinations and back enabling the traveler to travel luggage free. The companies used Federal Express and DHL to do the shipping. The service the companies provided was arranging the pickups and deliveries. As noted in the Second Report of the Receiver of Universal Express, Inc. (DE # 237):
It should be noted that, while Altomare was running the Company, few funds were spent on operations and improvements to operations. The great majority of funds spent was spent on various sorts of advertising and on acquisitions of subsidiaries. This advertising, largely in the name of Universal Express and not in the name of the operating subsidiaries, appears to have been targeted to investors and not to potential customers. There was a drive for revenues and market share more than profits, so pricing to customers was haphazard and ad hoc with many discounts given. In fact, the Receiver was told that the pricing for Luggage Express and Virtual Bellhop was below what was required pursuant to the contract with FedEx. Moreover, other companies provide the same services that the operating subsidiaries were providing.
Very little money was invested in systematizing operations. There were no real computer systems of value. Most of the employees kept track of their various responsibilities by use of excel spreadsheets developed by the particular employee. The credit card payment system was not integrated with the accounting system or with any other system, resulting in much duplication of effort and multiplication of errors.
The assets of each subsidiary, then, consisted of the intellectual property, such as domain names and trademarks, telephone numbers and the list of customers. A number of potential buyers contacted the Receiver, did due diligence, and made offers for the subsidiaries sold, and the Receiver accepted the best offers.
The Receiver sold the assets of the Luggage Express and Virtual Bellhop subsidiaries to Sports Express for $100,000, contingent on the approval of the Court. This was the highest offer received. Sports Express had earlier offered $125,000 but reduced the offer when the contract with Crystal Cruise Lines, Virtual Bellhop’s primary source of revenue, was terminated. As noted above, the assets of these subsidiaries consist mostly of the intellectual property and the customer list. The software for the Company was primitive. Additionally, Sports Express engaged two of the Company’s former employees.
Second Report of the Receiver of Universal Express, Inc. at 10-11.
The form of the Asset Purchase Agreement and supporting documents relating to the sale of VB and LE are attached as Exhibit A. This Agreement calls for the sale of the assets of VB and LE only. The considerable liabilities that the Receiver has reported to the Court in the two receiver reports will remain. While, of course, this is not the optimal solution, there were no offers that would assume those liabilities, and, therefore, if the sale had to be made with the liabilities, there would be no sale at all.
The Receiver engaged in a similar process with respect to the sale of Madpackers, Inc., a company which delivers the belongings of college students to and from their campuses and provides summer storage for students. Like Luggage Express, Madpackers has minimal assets which consist primarily of some corrugated cardboard boxes, its website, a primitive online ordering system, a registered trademark on the Madpackers name, some customer lists and two contracts with schools allowing Madpackers to solicit business from its students. The Receiver has agreed to sell most of Madpackers’ assets to Campus Logistic Solutions, LLC (“CLS”) for $70,000. As part of this transaction, the Receiver has retained the right to receive all unprocessed credit card charges for earned but uncollected fees and charges related to services performed by
Madpackers prior to the closing.
A number of other companies signed confidentiality agreements and did due diligence on the assets and operations of the company but the next highest offer received was only $35,000. The liabilities of Madpackers, similar to those of the parent Universal Express, consist largely of advertising expenses which did not assist in actually growing the business but, instead, appeared aimed at improving the public image of Madpackers and its parent Universal Express in the face of the SEC investigation.
CLS is a newly formed company that is partially owned by Lawrence Byron and Eric Veleker, the two individuals who were largely responsible for ensuring that Madpackers met all of its contractual obligations to make deliveries for the fall academic season despite the fact that they received only minimal compensation from the Receivership. While not all liabilities of Madpackers are being paid out of the sales proceeds, CLS, at Byron’s and Veleker’s insistence, conditioned its offer to the Receiver for Madpackers’ assets on her use of the bulk of the sales proceeds to pay drivers and other Madpackers workers who were not paid for their efforts prior to the start of the Receivership. In addition, a portion of the proceeds will be used by the Receiver to compensate Mark Miller, to whom she agreed to pay a commission on the sale for his enormous efforts on overseeing the various due diligence efforts in connection with the offering for sale of the Madpackers assets.
The form of the Asset Purchase Agreement and supporting documents relating to the sale of Madpackers’ assets is attached as Exhibit B. This Agreement calls for the sale of the assets of Madpackers and the payment by CLS of certain employee liabilities of Madpackers as part of the sales price. The considerable liabilities that the Receiver has reported to the Court in the two receiver reports will remain. While, of course, this is not the optimal solution, CLS’s offer was the only offer that provided for the payment of any of Madpackers’ liabilities, no other offers were received that included the assumption or payment of any of Madpacker’s liabilities, and, therefore, if the sale were conditioned on the assumption of all Madpackers’ liabilities, there would be no sale at all.
The Receiver could not fund the continuing operations of these companies and has made the best deals possible in selling them.
Wherefore, the Receiver requests that the Court enter the attached order approving the sales of VB and LE and of MP.
Respectfully submitted,
MOSCOWITZ & MOSCOWITZ, P.A.
1111 Brickell Ave., Suite 2050
Miami, Florida 33131
Telephone: (305) 379-8300
Facsimile: (305) 379-4404
Attorneys for Jane W. Moscowitz, Receiver
By: S/Jane W. Moscowitz
JANE W. MOSCOWITZ, ESQ.
Florida Bar No. 586498
Jmoscowitz@mmmpa.com
CERTIFICATE OF SERVICE
I hereby certify that on January 4, 2008, I electronically filed the with the Clerk of the Court for filing and uploading to the CM/ECF system which will send notification to the following as indicated to the parties listed below.
[…]
________________________________________________
U.S. SECURITIES AND EXCHANGE COMMISSION, :
:
Plaintiff, :
:
v. : 1:04-cv-2322(GEL)
:
UNIVERSAL EXPRESS, INC., et al., :
:
Defendants. :
________________________________________________ :
ORDER
THIS CAUSE having come before the Court on Receiver’s Motion To Approve Disposition of Subsidiaries Of Universal Express, Inc. and being otherwise fully advised in the premises, it is:
ORDERED AND ADJUDGED that Receiver’s Motion To Approve Disposition of Subsidiary Of Universal Express, Inc. is hereby granted to the extent set forth below.
The Receiver shall be permitted to sell the assets of Virtual Bellhop and Luggage Express on the terms and conditions outlined in the Asset Purchase Agreement and Bill of Sale between the Receiver and Sports Express which is attached to the Motion as Exhibit A.
The Receiver shall be permitted to sell the assets of Madpackers on the terms and conditions outlined in the Asset Purchase Agreement and Bill of Sale attached to the Motion as
Exhibit B between the Receiver and Campus Logistic Solutions, LLC.
DONE AND ORDERED
at New York, New York, this ____ day of January, 2008.
_________________________________
GERARD E. LYNCH
UNITED STATES DISTRICT JUDGE
