by Hayley Kaplan | Published November 2, 2012 at 3:48 PM
Redf Marketing LLC is now seeking to reorganize its advertising and marketing agency through a voluntary Chapter 11 proceeding after it lost a two-year litigation battle with the company that filed an involuntary case against it.
Judge J. Craig Whitley of the U.S. Bankruptcy Court for the Western District of North Carolina in Charlotte, where the debtor is based, signed an order converting Redf's involuntary Chapter 7 case to a voluntary Chapter 11 proceeding on Oct. 29.
Bridgetree Inc., owed $4.18 million, filed an involuntary Chapter 7 petition against Redf on Oct. 12. The information technology company, also based in Charlotte, sued Redf on May 18, 2010, in the U.S. District Court for the Western District of North Carolina in Charlotte. Judge Frank D. Whitney presided over the case. After a 10-day jury trial, Bridgetree was awarded $4.18 million in damages on Aug. 10.
Bridgetree accused Redf of misappropriating certain trade secrets, which caused Bridgetree economic loss. Bridgetree alleged Redf was involved in a conspiracy to defraud and raid the company's trade secrets, employees and other competitive information to unlawfully establish a competing enterprise.
Meanwhile, Redf sought to convert the involuntary proceedings filed by Bridgetree, now its lender, to a voluntary Chapter 11 case on Oct. 24. Redf said the conversion was for the benefit of its creditors and because there was a "strong possibility of reorganization" in its case.
Whitley also signed an order Oct. 30 authorizing Redf to use cash collateral from senior secured lender Bank of America NA. As of the petition date, the lender was owed approximately $1.45 million. The loan is secured by interests in Redf's accounts receivable, which currently total approximately $1.65 million.
The company said it would suffer immediate and irreparable harm without the hasty cash collateral relief because it would be unable to pay its operating expenses and be forced to cease operations. Redf said its assets and collateral, especially its receivables, would deteriorate rapidly if it couldn't access the cash. Redf reiterated its desire to reorganize its business to maximize the value of its bankruptcy estate for its creditors.
Redf is an advertising and marketing agency and is historically profitable, the company said in court documents. According to its website, Redf has a wide variety of clients including Geico, Coca Cola, SunTrust Bank, United HealthCare and the U.S. Postal Service, its website shows. The company has 36 employees.
Debtor counsel Andrew T. Houston, Richard S. Wright and Travis W. Moon of Moon Wright & Houston PLLC did not return calls on Friday. Glenn C. Thompson of Hamilton Stephen Steele & Martin is legal counsel to Bridgetree in the bankruptcy proceedings and also could not be reached for comment. Share: blog comments powered by Disqus
It's time to take out the revolving doors and replace them with moving sidewalks as yet another top government official and Wall Street critic joins the private sector. For other updates launch today's Movers & shakers slideshow.