COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2013 |
COMMITMENTS AND CONTINGENCIES: | ' |
Commitments and Contingencies | ' |
13. COMMITMENTS AND CONTINGENCIES |
|
CONTINGENCIES: |
|
BPI |
|
In connection with Baker's Pride's USDA loan application, BPI had Environmental |
Site Assessments done on the property where the Mt. Pleasant Street Bakery, Inc. |
resides as required by BPI's prospective lender. A Phase II Environmental Site |
Assessment was completed on October 31, 2011 and was submitted to the Iowa |
Department of Natural Resources ("IDNR") for their review. IDNR requested that a |
Tier Two Site Cleanup Report ("Tier Two") be issued and completed in order to |
better understand what environmental hazards exist on the property. The Tier Two |
was completed on February 3, 2012 and was submitted to IDNR for further review. |
Management's latest correspondence with IDNR, dated March 21, 2012, required |
additional environmental remediation to be in compliance with IDNR's |
regulations. Management has retained the necessary environmental consultants to |
become compliant with IDNR's request. Due to the nature of the liability, the |
remediation work is 100% eligible for refund from INDR's Innocent Landowner |
Fund. As such there is no direct liability related to the cleanup of the hazard. |
|
TYREE |
|
One of Tyree's largest customers, Getty Petroleum Marketing, Inc. ("GPMI") filed |
for bankruptcy protection on December 5, 2011. As of that date, Tyree had a |
pre-petition receivable of $1,515,401, which was subsequently written-off due to |
the uncertainty of collection. Additionally, Tyree has a post-petition |
administrative claim for $593,709. A Proof of Claim was filed with the |
Bankruptcy court on Tuesday, April 10, 2012. On August 27, 2012, the United |
States Bankruptcy Court for the Southern District of New York confirmed GPMI's |
Chapter 11 plan of liquidation offered by its unsecured creditors committee, |
overruling the remaining objections. The plan provides for all of the debtors' |
property to be liquidated over time and for the proceeds to be allocated to |
creditors. Any assets not distributed by the effective date will be held by a |
liquidating trust and administered by a liquidation trustee, who will be |
responsible for liquidating assets, resolving disputed claims, making |
distributions, pursuing reserved causes of action and winding up GPMI's affairs. |
As an unsecured creditor, Tyree may never collect or may only collect a small |
percentage of the pre and post-petition amounts owed. To date, Tyree has not |
been notified of any intent by the United States Bankruptcy Court for the |
Southern District of New York to claw back any amounts paid to Tyree |
pre-petition. |
|
As of the date of this filing, Tyree management has negotiated settlements with |
Local Unions 99, 138 and 355. Tyree management continues to negotiate with Local |
Unions 1, 25 and 200 over unpaid benefits that are due to each of the respective |
unions. As of September 30, 2013, Tyree had approximately $1.2 million in unpaid |
benefits. Tyree management does not dispute that benefits are due and owing to |
each of the respective unions, however, settlement and payment plan discussions |
are ongoing. Local Unions 1 and 200 have each filed suit in the United States |
District Court Eastern District of New York to enforce their rights as to the |
unpaid benefits due and owing from Tyree, and as guarantor of certain amounts |
due and owing, Amincor, Inc. is also a named party in these lawsuits. |
|
Local Union 200 filed a claim with the National Labor Relations Board ("NLRB") |
alleging that Tyree Service Corp violated the National Labor Relations Act. By a |
letter dated May 31, 2013, the NLRB dismissed all charges against Tyree Service |
Corp. due to insufficient evidence to establish a violation. Local 200 intends |
to appeal the NLRB decision. |
|
A variety of unsecured vendors have filed suit for non-payment of outstanding |
invoices totaling approximately $2.5 million as of September 30, 2013, which are |
reflected as liabilities on the Company's consolidated condensed balance sheet. |
Each of these actions is handled on a case by case basis, to determine the |
settlement and payment plan. |
|
ESI |
|
The Volkl license agreement was terminated in September 2011 and concurrently |
the Strategic Alliance Agreement with Samsung America CT, Inc. ("Samsung") was |
also terminated. Volkl is seeking a $400,000 royalty payment. Epic has initiated |
counterclaims against the various parties, including but not limited to Samsung, |
seeking damages for, including but not limited to infringement, improper use of |
company assets and breach of fiduciary duty. Volkl was successful in obtaining a |
judgment against Epic Sports International, Inc. and a confirmation of the |
Arbitration is presently pending in Federal Court. Management believes that this |
matter and the Frost matter below will eventually be settled out of court for |
less than the royalty and damages amounts sought. |
|
On September 28, 2012, Sean Frost ("Frost"), the former President of Epic Sports |
International, Inc., filed a complaint against Epic Sports International Inc., |
Amincor, Inc. and Joseph Ingrassia (collectively, the "Defendants"). The first |
cause of action of the complaint is a petition to compel arbitration for unpaid |
compensation and benefits pursuant to Frost's employment agreement. The second |
cause of action of the complaint is for breach of contract for alleged |
non-payment of expenses, vacation days and assumption of certain debts. The |
third cause of action of the complaint is for violation of the California Labor |
Code for failure to pay wages. In addition, Frost is seeking among other things, |
damages, attorneys' fees and costs and expenses. |
|
LEGAL PROCEEDINGS |
|
AMINCOR |
|
On July 6, 2012, SFR Holdings, Ltd., Eden Rock Finance Master Limited, Eden Rock |
Asset Based Lending Master Ltd., Eden Rock Unleveraged Finance Master Limited, |
SHK Asset Backed Finance Limited, Cannonball Plus Fund Limited and Cannonball |
Stability Fund, LP (collectively, the "Plaintiffs") commenced an action in the |
Supreme Court of the State of New York County of New York against Amincor, Inc., |
Amincor Other Assets, Inc., their officers and directors, John R. Rice III, |
Joseph F. Ingrassia and Robert L. Olson and various other entities affiliated |
with or controlled directly or indirectly by John R. Rice III and Joseph F. |
Ingrassia (collectively the "Defendants"). Plaintiffs allege that Defendants |
engaged in wrongful acts, including fraudulent inducement, fraud, breach of |
fiduciary duty, unjust enrichment, fraudulent conveyance and breach of contract. |
Plaintiffs are seeking compensatory damages in an amount in excess of $150,000 |
to be determined at trial. Litigation is pending. Management believes that this |
lawsuit has no merit or basis and intends to vigorously defend it. |
|
TYREE |
|
Tyree's services are regulated by federal, state and local laws enacted to |
regulate discharge of materials into the environment, remediation of |
contaminated soil and groundwater or otherwise protect the environment. The |
regulations put Tyree or Tyree's predecessor companies at risk for becoming a |
party to legal proceedings involving customers or other interested parties. The |
issues involved in such proceedings generally relate to alleged responsibility |
arising under federal or state laws to remediate contamination at properties |
owned or operated either by current or former customers or by other parties who |
allege damages. To limit its exposure to such proceedings, Tyree purchases, for |
itself and Tyree's predecessor companies, site pollution, pollution and |
professional liability insurance. Aggregate limits, per occurrence limits and |
deductibles for this policy are $10,000,000, $5,000,000 and $50,000, |
respectively. |
|
Tyree and its subsidiaries are, from time to time, involved in ordinary and |
routine litigation. Management presently believes that the ultimate outcome of |
these proceedings individually or in the aggregate, will not have a material |
adverse effect on the Company's financial position, results of operations or |
cash flows. Nevertheless, litigation is subject to inherent uncertainties and |
unfavorable rulings could occur. An unfavorable ruling could include monetary |
damages and, in such event, could result in a material adverse impact on the |
Company's financial position, results of operations or cash flows for the period |
in which the ruling occurs. |
|
IMSC/OTHER ASSETS |
|
Capstone Business Credit, LLC, a related party, is the plaintiff (on behalf of |
Amincor Other Assets, Inc.) in a foreclosure action against Imperia Family |
Realty, LLC ("IFR"). IFR is related to the former owners of Masonry's business. |
In November 2011 a Judgment of Foreclosure was granted by the court ordering |
that the IMSC property in Pelham Manor, New York (the "Property") be sold at |
public auction. As of the date of this filing, the deed to the Property has been |
recorded in the name of Amincor Other Assets, Inc. with the office of the |
Westchester County Clerk. |
|
A former principal of Imperia Bros., Inc. (a predecessor company of Masonry) |
filed a notice of appeal dated November 14, 2011 with the court contesting the |
Judgment of Foreclosure. On June 19, 2013, the parties in the above action |
agreed to a settlement in principle, which resolves the remaining causes of |
action and dismisses the third party complaint and the declaratory judgment |
complaint, with prejudice |