Transmar lender agent seeks case conversion, cites management scheme

By Caroline Salls

Pittsburgh, May 24 – Transmar Commodity Group Ltd. lender agent ABN Amro Capital USA LLC asked the U.S. Bankruptcy Court for the Southern District of New York to convert Transmar’s Chapter 11 case to Chapter 7, according to a motion filed Tuesday.

ABN Amro said Transmar’s bankruptcy case was filed following the company’s disclosure to the lenders of an “unexplained and drastic” reduction of more than $300 million in the value of the assets securing the lenders’ claims.

The agent said it conducted an investigation into the apparent disappearance of hundreds of millions of dollars of the lenders’ collateral and found that Transmar’s management, including members of the Johnson family that indirectly owns and continues to control the company, “perpetrated a massive fraud upon the agent and the lenders.”

“The fraud was committed and allowed to continue by the same people who today remain in control of the debtor-in-possession, and by employees of the debtor who today remain employed by the debtor,” ABN Amro said in the motion. “This status quo cannot continue.”

The agent said it found e-mails showing that the company’s books and records were doctored to support false borrowing base reports designed to maximize the amounts that Transmar could draw under the credit facility, and the lenders extended credit based on these fraudulent reports.

Since Transmar no longer has any continuing operations and is selling its diminishing assets, ABN Amro said the most appropriate means for removing the Johnson family from control of the company is a conversion of the bankruptcy case.

Morristown, N.J.-based Transmar operates as a full-service cocoa trading and cocoa butter product supplier to the international confectionary industry. The company filed for bankruptcy on Dec. 31 under Chapter 11 case number 16-13625.

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