|
July 22, 2003 Court No: 25-082885 Estate
No: 25-082885 Trustee’s
Third 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. Appointment of Inspectors The First Meeting of
Creditors (“FMC”) was held in Calgary
on September 26, 2002. It should be noted that no Inspectors were appointed at
the FMC. Since the first meeting and in the absence of Inspectors, the
Trustee has sought the approval of the court in respect of the disposal of
assets or the settlement of other matters including outstanding litigation
involving the Company. The Trustee has been
in contact with counsel for The Milton Shoong Foundation (“Shoong”), a creditor with a sizable claim against the Company. Counsel for Shoong has indicated that a
representative of Shoong is willing
to act as an Inspector, and as such a Second Meeting of Creditors is to be
convened on Friday August 8th, 2003 at 10:00 AM in Calgary, Alberta
for the purpose of appointing Shoong as
an Inspector in the estate. Books and Records The Company’s
corporate filings, including GST and corporate tax returns have been completed
up to the date of bankruptcy. Canada Customs and
Revenue Agency has contacted the Trustee with respect to arranging for payroll
and GST audits on the Company’s
records. These audits are expected to be conducted shortly. Assets The Trustee has
continued to investigate matters outstanding as at the date of the Trustee’s
Second Report, being December 20, 2002. These issues are discussed below in
reference to each of the assets listed in the Company’s Statement of Affairs. Cash and Funds Held
in Trust As at June 30, 2003,
the Trustee has $381,580 in trust. It should be noted that $100,000 is also
being held in trust by Parlee McLaws pledged as security by Bartizan’s Director’s in respect of
Directors and Officers Liability Insurance. These funds were pledged to
indemnify the Company’s Director’s
and Officers’ (“D&O”), as the Company was unsuccessful in its efforts
to secure D&O coverage through
traditional channels. The D&O of Bartizan have filed secured claims in
respect of these funds. As noted in the Trustee’s report of December 20, 2002,
Hustwick Wetsch was holding $50,000 in trust in respect of an outstanding legal
matter. This matter has since been settled and approved by the Court with all
funds being released under the settlement agreement. Amounts Due From
Shareholder As at the date of
this report, $210,883 was owing to the Company
in respect of funds advanced 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. Consequently,
the Trustee has instructed counsel to proceed with legal action regarding the
repayment of this amount. 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 by the Company 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 the date of this report, Trustee’s counsel has not made
any determinations with respect to the ownership of this property. The Trustee had
entered into an agreement to sell a 28 unit apartment complex located in
Regina, Saskatchewan. The sale was completed in early 2003 from which the net
proceeds to the estate totaled $ 240,429. The corresponding mortgage on this
property has been discharged. 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 that 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, we have been unable to locate 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 has received
documents from AMC counsel and
Lawrence Cunningham (“Cunningham”),
the Company’s former solicitor in
respect of this matter. The AMC documents
indicate that the shares were issued in Cunningham’s
name on October 14, 2000. Subsequent to the issuance of the shares, the
shares were subject to a Hypothecation Agreement dated November 14, 2000. This
agreement indicates that the shares were pledged as security in respect of a
purchase agreement between AMC and
Micralyne Inc. and were eventually realized on by the secured party when the Company defaulted on its obligations.
The Trustee is in the process of analyzing all information with the aid of
counsel to determine if there are any opportunities remaining in which the
Trustee might realize some value from this investment. Investment in Consolidated Kaitone Holdings Ltd. The last audited
financial statements for the Company indicated
ownership of common 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
previous reports, we have, despite our efforts, been unable to confirm
ownership of Kaitone shares.
Accordingly, the Trustee has instructed counsel to issue a demand letter to
Bank Hapoalim B.M. (“Hapoalim”)
confirming all transactions and any other details in respect of the Company’s account from the date of it’s
inception. As at the date of this report, we have not yet received any
information from Hapoalim in this
regard. 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. As noted in the
Trustee’s report of December 20, 2002, the Trustee had not intended to issue
a Statement of Claim against Larcon for the unpaid monies advanced to
the joint venture until such time as Inspectors were appointed. However, the
Trustee has decided to go forward with issuing the Statement of Claim in the
absence of Inspectors and has been given approval by the Court to do so. As at
the date of this report, a Statement of Defense has not yet been received. The
Trustee will evaluate potential courses of action with respect to finalizing
this matter 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. 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 shares for $149,800 in the above company whose principal
business was to develop and market single and multi-family homes in a joint
venture with the Government of Jamaica. It should be noted however that 3851281
Canada Inc. (“385”) is a shareholder
in Overseas Development Corp. along with Bartizan,
rather than 385 being previously
identified as the company in which Bartizan
had invested. It should also be
noted that a corporate search has indicated 385
has changed its name to A&W Trade Marks Inc. The Trustee has met
with legal counsel to 385 to discuss
the nature of their involvement with Overseas.
It should be noted that according to Tony Mayer, a former Director of Bartizan that the Unanimous Shareholder
Agreement (“USA”) in respect of Overseas was executed by Khan Agha (“Agha”) on behalf of 385. After meeting with counsel for 385, various corporate documents were produced indicating that Agha was never a Director or Officer of 385 and, as such, Agha was not in a capacity to enter into such an agreement. A copy
of the Notice of Directors effective as at the date the USA was entered into is attached as Appendix “A” to this report. The execution of the USA by an unauthorized representative of
385 has raised serious issues
regarding the legitimacy of Overseas. It
should be noted that Agha had access
to the monies advanced to Overseas and
that all efforts made by the Trustee to contact Agha have been unsuccessful. It is the intention of the Trustee to
refer this matter to the RCMP for investigation. 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 July 22, 2003,
Alger & Associates Inc. has received provable claims for $1,827,532 with
known claims according to the Statement of Affairs filed by the company
totaling $14,285,226. 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. We have recently achieved settlement on a
longstanding lawsuit. The Company had previously deposited the
value of a former trade’s lien together with security for costs. On application to the court, settlement was
achieved and Discontinuance of Action filed.
Counsel for the Trustee is in the process of finalizing full and final
releases. Receipts and Disbursements Attached, as Appendix
“B” to our report is a statement of Receipts and Disbursements to July 18,
2003. 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.
|
|
|