Replies to post #327443 on Spongetech Delivery Systems Inc (fka SPNGQ)

[hasher]

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. However, pursuant to the Bankruptcy Code, these claims must be paid in full prior to any return to shareholders.

Not good for the shareholders.. 11.8 mill has to be paid to everyone else first and they are beyond broke

[scion]

9. Trustee’s Appointment.

Several emails from shareholders inquire about Mr. Hays’ qualifications to serve as Trustee in this case. The Trustee was selected to serve as Trustee in this matter after an extensive interview with the United States Trustee for the Southern District of New York. Mr. Hays has over 20 years of experience in serving as a Bankruptcy Trustee or working with Bankruptcy Trustee’s in large complex bankruptcy matters. Mr. Hays is a Certified Turnaround Professional (CTP) by the Turnaround Management Association and a Certified Insolvency and Restructuring Advisor by Association of Insolvency and Restructuring Advisors.

As has been pointed out in several emails, Mr. Hays’ primary office is in Atlanta, Georgia. Please note that serving as Trustee in this case will require that the Trustee and professionals employed by him spend substantial time in both New York and Georgia which is where the Dicon assets and business records are located. The Trustee has a financial consultant on his team who lives in New York who will serve as the primary manager for the engagement.

There also seems to be a significant misunderstanding in emails from shareholders about the Trustee’s relationship with the SEC. As noted in Mr. Hays’ publicly available resume, he has been appointed to serve as a receiver in numerous and federal state courts throughout the United States. Some of these appointments have come in enforcement actions brought by the
SEC. When Mr. Hays has served as a receiver in SEC enforcement actions, he is actually appointed by the Federal Court Judge handling the case, not the SEC. Moreover, the role of a receiver in receivership cases is to look out for the interests of creditors and investors, not the SEC. Indeed, Mr. Hays is only one of many insolvency professionals whom the SEC recommends, from time to time, to serve as receivers in matters brought by them. Mr. Hays does not work for and is not employed by the SEC and has never been paid any salary or compensation by the SEC. None of his family members work for or are employed by the SEC.

It is a matter of public record in this case that the SEC submitted Mr. Hays’s name to the Court to serve as a receiver for Spongetech in the enforcement action brought by the SEC. However, the Court never ruled on the SEC’s Motion and Mr. Hays was never appointed to serve as receiver.

In its Motion to Appoint a Chapter 11 Trustee, the U.S. Trustee specifically mentioned that Mr. Hays had been recommended to serve as receiver in the SEC Action.

As this Court is well aware, the Trustee’s fiduciary responsibility as the Trustee in this case is to maximize the value of the Spongetech assets for the benefit of the creditors and investors in this case and that is how he intends to manage this case.

The Trustee has selected the law firm of McKenna Long & Aldridge LLP (“MLA”) to serve as his counsel in this case. MLA has experienced bankruptcy professionals both in their New York and Atlanta offices, and can very efficiently handle this matter, particularly in the event any litigation is required in the Dicon Bankruptcy Case which is pending in Georgia.

Finally, with respect to the Trustee’s fees and expenses, any fees or expenses incurred by the Trustee or professionals employed by the Trustee, including travel and other costs, are subject to review by the Bankruptcy Court and the guidelines established by the United States Trustee. Neither the Trustee nor any professional employed by the Trustee can be paid anything without prior review by the Court and the United States Trustee.

The Trustee’s focus in this case will be to handle the matter as efficiently as possible to realize the greatest return for creditors and shareholders.


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