Creditors want budget for Fosses
Creditors of Foss Manufacturing have asked a federal bankruptcy judge to put the company’s former CEO, Stephen Foss, and his wife Patricia on a monthly budget, to prevent them from liquidating away assets the creditors claim the Fosses “looted” from the company.
The budget would cover everything from laundry expenses to food. The creditors also wanted the Fosses to supply creditors with a breakdown of all of their assets each month, including antiques and jewelry.
The June 21 motion came a week after Bankruptcy Court Judge J. Michael Deasy issued a temporary restraining order freezing the couple’s assets – aside from their living expenses — citing their recent sale of property and their refusal to testify where the proceeds of that sale – totaling some $7 million – are located. Creditors at the time wanted living expenses spelled out, but Deasy put off ruling on putting the two on a budget until the issue was aired at a hearing, now scheduled for July 5.
The resulting budget and financial hearings that the creditors prepared for that hearing don’t include specific amounts. Those would be proposed by the couple, and approved by the court. The Fosses also would have to provide bank account statements and other documentation either to the creditors or an independent examine.
The Official Committee of Unsecured Creditors filed suit on June 12 in an effort to get back the money that it alleges Stephen Foss took from the Hampton-based company for personal use by himself, family and associates, even when they knew the company was going broke.
A group of private investors bought Foss Manufacturing’s assets in April for $39 million and kept it running as a going concern, leaving behind a bankrupt shell renamed Felt Manufacturing Company. Felt was able to pay off secured creditors in full, but that still left unsecured creditors some $15 million in the hole.
The unsecured creditors were hoping to collect that from the Foss, their family businesses, and seven other relatives and officials from the company. – BOB SANDERS