King Mountain Tobacco and agencies to mediate confirmation issues

By Sarah Lizee

Olympia, Wash., June 4 – King Mountain Tobacco Co., Inc. and several governmental agencies are having their plan-related issues sent to mediation, according to a minute entry filed Thursday with the U.S. Bankruptcy Court for the Eastern District of Washington.

Judge Mary Jo Heston was appointed as settlement judge to assist in resolving issues related to confirmation of the Chapter 11 plan as well as the pending motions to appoint a trustee or examiner.

The court said it has tabled the confirmation process, pending the results of the mediation.

As previously reported, several governmental agencies, including the U.S. Alcohol and Tobacco Tax and Trade Bureau, have filed motions seeking appointment of a Chapter 11 trustee.

King Mountain is owned and controlled by Trina Wheeler, who also owns multiple additional affiliate businesses, all known as the Wheeler enterprises.

“Information discovered by the agencies supports the conclusion that Ms. Wheeler operates the businesses she considers to be Wheeler enterprises for her sole financial benefit, ignoring corporate formalities and in blatant disregard of her legal obligations to creditors while operating financially insolvent businesses,” the agencies said.

“Given the large amounts of money and property that have flowed and continue to flow among the affiliates – all wholly owned by and run for the benefit of the same individual, Ms. Wheeler – a fundamental conflict of interest exists that cannot be resolved without an independent party such as a Chapter 11 trustee or examiner.”

King Mountain Tobacco is a White Swan, Wash.-based tobacco manufacturer owned and operated by citizens of the Yakama Nation. The company filed Chapter 11 bankruptcy on Sept. 25, 2020 under case number 20-01808.

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