After proceedings in both bankruptcy court and U.S. district court, we recovered $15.5 million for distribution to the employee owners of Vann’s and its creditors.
Vann’s Inc. was a successful, employee-owned retail appliance and electronics business that operated successfully in western Montana for many years. It was rendered insolvent, however, after its founder retired and its remaining officers, directors and managing agents then in a series of “insider” transactions effectively “looting” the company. For example, while simultaneously serving as directors, officers and managing agents of Vann’s and as trustees for its Employee Stock Ownership Plan, the defendants caused the company to purchase or finance construction of properties owned by defendants’ separate LLCs. Vann’s then paid rent to defendants’ LLCs, effectively paying off the mortgages and construction loans on properties that defendants would own free and clear.
These and other insider transactions destroyed Vann’s financial solvency and forced the company into bankruptcy, resulting in the loss of hundreds of jobs, the failure to pay millions of dollars owed to Vann’s legitimate creditors, and the loss of employee retirement funds. A bankruptcy trustee was appointed and our firm was retained to pursue claims by the estate and by individual ESOP participants against defendants and to oppose the claims they had asserted against the bankruptcy estate. Ultimately, after proceedings in both bankruptcy court and U.S. district court, we recovered $13.5 million for distribution to the employee owners of Vann’s and its creditors.