Munson OKs $290,000 in ATC Garment settlement

The federal court has approved a settlement that will enable the bankrupt garment factory Advance Textile Corp. to receive a total of $290,000 from an insurance company and former ATC officials.

U.S. District Court for the NMI Chief Judge Alex R. Munson granted ATC’s Chapter 7 bankruptcy trustee Robert J. Steffy Sr.’s motion to approve the settlement between the trustee and FirstNet Insurance Co. in the amount of $175,000.

Munson also agreed with the trustee’s request to approve the settlement between Steffy and former ATC owners and officers Paul Zak and Kidong Choi, and Rifu Apparel Corp. in the amount of $115,000.

The judge issued the decision after Monday’s hearing in which he considered the arguments of the trustee and attorneys involved in the case.

Munson said he received no written opposition from the creditors of ATC.

Steffy, on behalf of the ATC estate, settled its fire damage property claims against ATC’s insurer, FirstNet Insurance Co.

The fire occurred at the vicinity of ATC factory on Navy Hill on Nov. 11, 2004. The blaze reportedly damaged the factory’s plant/machinery, equipment and other property. ATC filed the bankruptcy petition in 2002.

Steffy also settled his non-tax related claims against Zak, Choi, and Rifu Apparel.

Attorneys Wayson W. S. Wong and Sean E. Frink, counsel for Steffy, stated in court papers that they believe that such settlements are fair and reasonable.

Under the settlement, Zak, Choi, and Rifu (debtors) will be discharged from liability in the case.

With respect to the attorneys’ fee and court costs issues, Munson gave the trustee’s lawyer until Nov. 8 to file an amended response to the oppositions for application for attorneys’ fees and an amended application for attorneys’ fees.

“Once received, the court will consider the amended response and application, along with all the arguments of the parties and issue an order regarding the trustee’s application for attorney’s fee,” the judge said.

Wong disclosed in court papers that as of Sept. 28, 2006, the ATC estate had a net amount of $148,646.11 in remaining cash. Optimistically, Wong said, the sale of the factory will net another $130,000.

Wong said the total assets of the estate could be in excess of $560,000, or about $514,000 net of the $46,058.55 that they requested as additional attorneys’ fees, even after all of the expenses, charges and bills have been paid.

The lawyer pointed out that they initially started with about $30,000 in cash and a factory that many contend could not be sold due to title issues.

The ATC bankruptcy case has been dragging on in federal court for more than three years now, resulting in payments of over $200,000 in attorneys’ fees and court costs.

Steffy’s request for another payment for attorneys’ fee in the amount of $46,058.55 was opposed by Dr. Terry Dawson, Dr. Wassserman, and Tracy Anderson.

Dr. Dawson, who is based in Alabama, claimed to be a creditor of ATC. He said he invested in the purchase of common stock and made loans to ATC in the form of notes.

Dawson said the trustee’s legal cost eroded the value of the debtor’s estate with nothing to show for its efforts except consistently asking for more money. The estate, he said, should have been liquidated years ago.

Dr. Wasserman, who claimed to have mortgaged interests in ATC property, also opposed the trustee’s alleged excessive attorneys’ fees and costs.

But the Guam-based attorney Wong has defended the payments of over $200,000 in attorneys’ fees and court costs.

Wong described the opposition to their request for another $46,058.55 in attorneys’ fees as an “unfounded desperation attack” by people whom they have cornered in a scheme that involved transfers that would defraud creditors.