By Patrick Cronin
Hampton Union, Tuesday, May 2, 2006
[The following article is courtesy of the Hampton Union and Seacoast Online.]
HAMPTON -- A bankruptcy judge has approved the sale of Foss Manufacturing to Foss Manufacturing LLC, a Nevada limited liability company at a price tag of $39 million.
Bankruptcy Judge Michael Deasey granted the request last week to approve the purchase agreement that was filed by Trustee Patrick O'Malley, who has been overseeing the company during the bankruptcy proceedings.
According to court documents, the sale provides for continuation of the company, which manufactures non-woven fabrics and synthetic fibers, and the continued employment of 355 workers.
It also clears up prior debts and liens.
According to the Nevada Secretary of State's office, Foss Manufacturing LLC was created on March 27.
The limited liability company is owned by Foss Holdings, LLC, which is owned by the Alinian Capital Group LLC, a Delaware limited liability company.
Alinian is owned by A.J. Nassar, Frank Cougentakis, James Morrell and James Magruder.
According to court documents, the men have no connection with the previous owners or the trustee.
CapitalSource is providing Foss Manufacturing LLC with financing for the purchase of the company, which will continue to operate in Hampton.
The sale comes just seven months after the company filed for Chapter 11 bankruptcy protection.
Foss Manufacturing filed for bankruptcy last September after its chief lender, CapitalSource, cut off credit, alleging the company fraudulently borrowed millions of dollars to benefit itself and company insiders.
According to the bankruptcy filing, the company estimated assets of $10 million to $50 million and estimated debts in the same range.
Creditors claimed in a court document that company money was used to pay for home improvements, club memberships and use of the company's private jet. Creditors alleged former CEO Stephen Foss used company money as his "personal piggy bank."
Foss resigned from the company in August after allegations of fraud came to light.
O'Malley was appointed trustee in October after the board of directors requested a trustee to run the company because of friction between it and CapitalSource.