Court orders Chapter 11 trustee appointment for Money Tree bankruptcy

By Caroline Salls

Pittsburgh, April 27 - Money Tree, Inc.'s official committee of unsecured creditors' motion for appointment of a Chapter 11 trustee for the company's bankruptcy case was approved Friday by the U.S. Bankruptcy Court for the Northern District of Georgia.

The committee asked the court to appoint an examiner in February, claiming that "the debtors have articulated no discernible strategy for reorganizing or liquidating their assets" despite having been in bankruptcy for more than two months at that point.

"Neither the debtors, nor their advisors, have any semblance of control or knowledge of their financial condition," the committee said in the motion.

"To the contrary, the debtors have used their lengthening stay in bankruptcy to liquidate their assets and pay insiders the proceeds, while seeking a vague investment from a third party to reorganize."

The committee said Money Tree had acknowledged making misstatements in its 10-Q and 10-K filings with the Securities and Exchange Commission, which "grossly inflated the value of the debtors' assets."

The creditor group said these public filings contained financial information that the company's individual creditors relied on when making investment decisions.

In addition, the committee said Money Tree has been insolvent since at least 2007.

The unsecured creditors said they were still investigating the Money Tree debtors' financial affairs, but that there is a distinct possibility that the debtors have been funding their operations over the last 10 years primarily from the sale of debentures, rather than through earnings from loans to consumers.

The committee said chief executive officer Bradley Bellville "not only pays himself $250,000 annually, but personally profits from side businesses that are run out of the debtors' locations, including the Interstate Motor Club, of at least $70,000 annually."

Also, the committee said Money Tree is leasing property from numerous former equity owners or affiliates of former or current equity owners.

"Due to, among other things, numerous conflicts of interest and incompetence on the part of management, a Chapter 11 trustee is required to oversee the orderly liquidation of the debtors' assets in order to maximize the return to creditors," the committee said in the motion.

"Management's history of self-dealing, incompetence, and gross mismanagement can no longer be tolerated."

Money Tree, a Bainbridge, Ga., consumer loan company, filed for bankruptcy on Dec. 16. The Chapter 11 case number is 11-12254.

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