|
December 20, 2002 Court No: 25-082885 Estate
No: 25-082885 Trustee’s
Second Report In the Matter of the Bankruptcy of Bartizan Capital
Corporation Assignment On September 9, 2002
an Assignment for the general benefit of creditors was made by Bartizan Capital
Corporation (“Bartizan” or the “Company”) and was filed with the
Official Receiver on September 10, 2002. Operations of the Company have been discontinued. First Meeting of Creditors and Appointment of Inspectors The First Meeting of
Creditors (“FMC”) was held in Calgary
on September 26, 2002. A copy of the Trustee’s Preliminary Report as well as
the minutes from the FMC can be
downloaded from our website at www.corporaterecovery.ca/x_infocurrent.htm.
It should be noted that no Inspectors were appointed at the FMC.
In the absence of Inspectors, the Trustee must seek either court or
creditor approval in order to undertake any actions with respect to the
disposal of assets or to direct the Trustee’s counsel to take such court
proceedings for the recovery or protection of the bankrupt’s property. The Trustee is
endeavoring to convene a second meeting of creditors for the purpose of
appointing Inspectors. Books and Records The Company’s corporate
filings, including GST and corporate tax returns have been completed up to the
date of bankruptcy. To date, Canada
Customs and Revenue Agency has not contacted the Trustee with respect to
arranging for payroll and GST audits on the Company’s
records. Assets The Trustee has
continued to investigate the matters outstanding as at the date of the
Trustee’s Preliminary Report. These issues are discussed below in reference to
each of the various types of assets stated in the Company’s filed Statement of Affairs. Cash and Funds Held
in Trust As at December 9,
2002, the Trustee has $160,694 held in trust. It should also be noted that
$100,000 in trust funds is being held by Parlee McLaws and an additional
$50,000 is being maintained be Hustwick Wetsch. The $100,000 held by Parlee
McLaws is in reference to funds pledged as security by Bartizan’s Director’s
and Officers’ Liability Insurance for any potential Director’s and Officers’
(D&O) liability claims as the Company
was unsuccessful in its efforts to secure coverage through traditional
channels. The D&O of Bartizan have filed secured claims in
respect of these funds. Additionally, Hustwick Wetsch is holding $50,000 in
trust in respect of an outstanding legal matter. These funds are subject to
specific trust conditions and are not releasable to the Trustee. There are no
other trust funds outstanding to be collected by the Trustee. Amounts Due From
Shareholder As noted in the
Trustee’s Preliminary Report, Bartizan had
indicated that $210,883 is owed to the Company
by way of a shareholder loan to Keith Talbot, a former Director. The
Trustee has requested repayment of this loan and Mr. Talbot has responded that
he does not believe that this debt is owing to the Company. Mr. Talbot has not
provided sufficient evidence to indicate that this amount has been repaid. The
Trustee has notified counsel regarding this matter. It is expected that a
Statement of Claim will be filed against Mr. Talbot for the amount outstanding
upon approval of the Inspectors or the Court. Investments in Real
Estate As at the date of Bartizan’s last audited financial
statement, the Company had
investments in two real estate properties, one located in Miami, Florida and
the other in Regina, Saskatchewan. The Florida property
was valued at $1,083,593 as at December 31, 2001. Further documents provided to
the Trustee indicate that ownership of the property is in question. The
Trustee’s legal counsel has been instructed to investigate this matter to
determine if Bartizan does in fact
have an interest in this property. As at this date, Trustee’s counsel has not
made any determinations with respect to the ownership of this property. At the FMC, the Trustee had requested and
received permission to sell the condominium project located in Regina, Saskatchewan.
The sale was approved for consideration of $1,150,000 and is scheduled to close
in December. It is anticipated that proceeds to the estate net of the mortgage
on the property and costs will be between $200,000 and $250,000. Mortgages and Notes
Receivable As noted in the
Trustee’s Preliminary Report, the Trustee has confirmed the full repayment of
all outstanding mortgages with the various legal parties involved in each
particular transaction. Additionally, the Trustee continues to collect funds in
respect of a mortgage receivable of $45,009 which is secured by real property
in Sangudo, Alberta. Other Investments The Company has a number of investments
including investments in private companies, investments in joint ventures, and
investments in wholly-owned subsidiaries. Investment in AMC Technologies Corporation AMC Technologies
Corporation (“AMC”) is a private
Alberta company established to develop and supply micro fabricated products for
bio analysis and telecommunications. According to Bartizan records, the Company purchased 3,408,333 shares of
AMC Technologies Corporation (“AMC”)
with a book value of $369,621. However, Bartizan
was unable to produce any documentation to substantiate the nature of this
investment. AMC was contacted by the
Trustee to confirm the amount and nature of this investment and was informed
through their counsel that they had no record of having received funds for
investment in AMC from Bartizan. The Trustee will continue to
analyze all available information to determine the legitimacy of this
investment. In light of the preceding information, the Trustee is unable to
evaluate potential realization in respect of this investment. Investment in Consolidated Kaitone Holdings Ltd. The Company has purchased shares in
Consolidated Kaitone Holdings Ltd. (“Kaitone”)
a company trading on the Toronto Venture Exchange. Bartizan records
indicate a book value of $74,186 for the Kaitone
shares; the number of shares however is unknown. As noted in the Trustee’s
Preliminary Report, representatives of Bank Hopaoline B.M. in both Toronto and
Tel Aviv, Israel have not responded to the Trustee’s request to confirm the
number of said shares. As such, the Trustee has contacted Kaitone’s CFO to confirm the number of shares owned, and was
informed that Kaitone had not issued
the shares to Bartizan from treasury
and therefore could not confirm the ownership of shares. The Trustee is
continuing to evaluate what other options may exist to determine ownership of
these shares. Investment in 955091 Alberta Ltd. (a Joint Venture) This joint venture
was established to develop and market single and multi-family homes in Fort
McMurray, Alberta. Larcon had forwarded
the Trustee a cheque for $30,000 in late September as a return of funds
advanced to the joint venture. A stop payment was placed on this cheque by the
operator of the joint venture, Stan Larson,
who informed the Trustee that this was done as a result of Bartizan’s filing for bankruptcy. Larson had stated that because further
funds would not be forthcoming from Bartizan,
that the $30,000 was needed to satisfy the remaining obligations of the
joint venture. The Trustee has
discussed the matter with counsel and has been advised that a Statement of
Claim should be issued for the unpaid monies advanced to the joint venture.
However, given the estate does not have Inspectors at this time, the Trustee
will not go forward with a Statement of Claim until after the next meeting of
creditors is held. Pursuant to this, we
are hopeful that inspectors will be elected to authorize the trustee to proceed
with legal actions. Investment in Diamond Holdings LLC (“Diamond”) As noted in the
Trustee’s Preliminary Report, the value of this investment is tied to the
legitimacy of the quitclaim registration on the Miami property. As noted above,
Trustee’s counsel is endeavoring to determine the nature and extent of the Company’s interest in this property. Investment in 3851281 Canada Inc. o/a Overseas Development
Corp. (“Overseas”) Bartizan is
believed to have purchased $149,800 of shares of the above company whose
principal business involves developing and marketing single and multi-family
homes in a joint venture with the Government of Jamaica. Under the provisions
of s. 164 of the Bankruptcy and Insolvency Act, the Trustee has demanded that Overseas
provide current financial statements and a statement of all funds received
and disbursed by Overseas to date.
This information has not yet been received. As such, the Trustee is not able to
determine the value of this investment. Investments in Bartizan Management and Bartizan Capital (US)
LLC These companies are
wholly owned subsidiaries of Bartizan and
contain no cash or other assets. As such, the value of these investments is
nil. Investments in Kingman Fund Inc., Kingman Mortgage
Investment Fund and Kingborough Equities These companies are
wholly owned subsidiaries of Bartizan
that were advanced funds from the Company.
The Trustee’s information regarding these investments is limited to
unaudited Notice to Reader financial statements for all companies dated June
30, 2001. Details regarding the nature of these investments are not known,
however, the financial statements indicate that there are no assets in these
companies and all liabilities are owed to Bartizan.
Claims of Creditors As at September 26,
2002, Collins Barrow Limited has received provable claims totaling $1,764,595
with known claims according to the Statement of Affairs filed by the company
totaling $14,234,403. The claims are broken down as follows:
Pending Legal Actions As noted in the
Trustee’s Preliminary Report, the Company is involved in a number of
outstanding legal actions. The Trustee has sought the advice of counsel with
respect to these matters but will not be pursuing any actions until Inspectors
have been appointed. Receipts and Disbursements Attached as Appendix
1 to our report is a statement of Receipts and Disbursements to December 9th,
2002. Realization and Projected Distribution Given the complex
nature of the debtor’s affairs, including the number of contingent claims that
may exist, it is impossible for the Trustee to accurately project the
realization and distribution to the creditors. Other Matters Notification of RCMP As a result of
missing information on a number of investments made by the Company, the legitimacy of these investments have been placed into
question. As such, the Trustee believes that should additional information to
support these transactions not be found, that a request will be made to the
office of the Superintendent of Bankruptcy to consider a police investigation.
Certificate of Appointment Notice of Assignment Notice of Bankruptcy & First Meeting of Creditors Minutes of First Meeting of Creditors - Sept 26/02 Statement of Affairs Proof of Claim Trustee's Preliminary Report - Sept 26/02 Trustee's Second Report - Dec 20/02 |
 |