Bankruptcy – Western District of Pennsylvania
Situation: I.D. Craig Service Corp. packaged group insurance coverage for approximately 11,000 senior citizens in Pennsylvania, Ohio, West Virginia and other states. When the insurance provider began to experience problems with the debtor and threatened to terminate coverage, the debtor filed Chapter 11. Ten days after the filing, with the company having over $2 million in the bank, the Bankruptcy Judge decided that a trustee was necessary and appointed Joseph J. Bernstein as Chapter 11 trustee.
Action: The trustee and Bernstein and Bernstein, P.C. maintained as much insurance coverage as possible for the customers and obtained approval of the bankruptcy court to pay the 11,000 subscribers their priority claims totalling approximately $1.3 million. When it became clear the company could not be rehabilitated, however, the trustee obtained court approval to liquidate the assets through a Chapter 7 proceeding.
Among the assets liquidated were real estate, contract rights, accounts receivable, vehicles, office equipment and fourteen Pittsburgh Steelers football season tickets. The trustee sought the right to sell the tickets at auction after opposition by the Steelers. Bernstein and Bernstein, P.C. succeeded in convincing the Court that such a sale was proper and sold the renewal rights to the 14 tickets for more than $18,000.00.
The trustee and the law firm have succeeded in collecting assets enabling a distribution of more than $4,000,000, resulting in payment of more than 86% of claims to creditors.