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| Forms and Instructions - Recent Status - Chapter 11 Trustee Reports - Creditor's Comm. Updates - Contact Information |
Creditors of Evergreen Security, Limited Re: In re Evergreen Securities, Limited; Status report at continued § 341 Meeting of Creditors; Our file no. 11828.001 Dear Creditor: As you may be aware, the law firm of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., ("Stearns Weaver") has been retained by the Official Committee of Unsecured Creditors (the "Committee") to represent it in connection with the above-referenced bankruptcy reorganization case. This letter will provide you with a brief summary of the developments in the case to date and an introduction to both the Committee and Stearns Weaver. The Committee The Committee was appointed by the Office of the United States Trustee in February of this year. It currently consists of five members located within the United States and the Caribbean. The Office of the United States Trustee has indicated that it may increase the membership in the Committee following today's meeting. Should you wish to be considered for membership on the Committee, please contact Elena Escamilla in the United States Trustee's Office; she may be reached at (407) 648-6465 or through electronic mail at Elena.L.Escamilla@usdoj.gov. Although each of the members of the Committee is a creditor of Evergreen Security, Limited ("Evergreen" or the "Debtor"), each member agreed as a condition precedent to joining the Committee to accept a fiduciary responsibility for all of the Evergreen investors and other unsecured creditors. This means that each member of the Committee has agreed to subrogate its own, individual interests in connection with the Evergreen case to the needs of the class composed of all investors and unsecured creditors, at least with respect to actions pertaining to the Committee. The Stearns Weaver Law Firm Stearns Weaver is a roughly one hundred lawyer, multi-office Florida law firm specializing in all aspects of civil jurisprudence. The firm's nine lawyer bankruptcy department has substantial experience in representing debtors, creditors, creditors committees, and trustees. In recent years, we have been active in large bankruptcy cases involving the recovery of assets from domestic and overseas sources. In addition to bankruptcy partners and associates, the firm has also made several seasoned litigation and securities law partners available to assist the Committee with this engagement. Case Status In January, the Debtor, a British Virgin Islands corporation, filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. The case has been assigned to United States Bankruptcy Judge Arthur Briskman. As previously noted, the Office of the United States Trustee appointed the Committee in February of this year and earlier this month, on the motions of multiple parties in interest, the court ordered that a Chapter 11 Trustee take over most of the duties and responsibilities of the Debtor. To date, the Committee has played an active role in the Evergreen Case. It has met on numerous occasions and has taken a position at virtually every hearing in the case. Counsel for the Committee has deposed Mr. William Zylka and others who played a central role in the affairs of the Debtor and certain related companies and has scheduled numerous additional examinations under oath which will occur in the next few weeks. The Committee has also obtained certain documents which may become relevant in the Committee's effort to recover assets for the benefit of Evergreen's investors and creditors. The Committee was also instrumental in freezing and disclosure of the assets of the Debtor and in obtaining the turnover of certain business records of the Debtor and Mr. Zylka. At one point, the Committee negotiated an agreement with the Debtor through which certain litigation rights against insiders of the Debtor and its management company which would normally belong to a debtor-in-possession were transferred to the Committee. However, with the recent appointment of William Cuthill as Chapter 11 Trustee in this case, these litigation rights have been transferred to the trustee. Mr. Cuthill has indicated that he intends to work closely with the Committee and to keep the Committee actively involved in the case. What happens next? Generally in a chapter 11 bankruptcy reorganization case, the debtor-in-possession remains in control of its business operations and any litigation causes of action. However, in this case there have been allegations of gross mismanagement on the part of the Debtor and of possibly fraudulent transfers of the Debtor's assets. In light of these facts, Bankruptcy Judge Briskman has appointed a Chapter 11 Trustee to take over substantially all of the business and litigation responsibilities of the Debtor. Together with the Committee, the Chapter 11 Trustee will evaluate the prospects for reorganizing or liquidating the Debtor's assets through a reorganization plan to be filed with the bankruptcy court. In addition, the Chapter 11 Trustee and the Committee will also gather information regarding the Debtor to evaluate whether any other viable avenues, including litigation, exist to recover assets for the Debtor's bankruptcy estate. Although the Debtor currently owns less than $3 million in liquid assets to offset its scheduled liabilities of approximately $204 million, the Chapter 11 Trustee and the Committee are hopeful that substantially greater funds will be recovered for the benefit of Evergreen's investors and other creditors. These recovered funds, together with any funds which the Debtor may receive in connection with a reorganization plan, will be used to repay Evergreen's investors and other creditors. Questions Should you have any questions which were not adequately addressed at today's meeting of creditors, please utilize the following resources in the order listed below:
Sincerely, Hans Christian Beyer |
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| Official Committee of Unsecured Creditors for Evergreen Security, Ltd. |