Reorganization & Litigation
Note: Items are posted on this page in chronological order so that the
information is easier to follow. Scroll down to the bottom for the newest
items.
Updated 11/21/06
AHRMA reorganizes
AHRMA has been defending itself for over 5˝ years
in a groundless lawsuit filed in federal court by Mr. Robert Iannucci and
Team Obsolete. When we filed our claim with our insurance carrier
(Reliance), we discovered it was insolvent in the largest insurance
bankruptcy of its type in the country. AHRMA was able to secure coverage
from the Wisconsin insurance insolvency fund that covered $300,000. It was
anticipated this would cover the cost of the case. The fund has been
exhausted. After five amended complaints, 245 docket entries, protracted
discovery disputes and other procedural shenanigans, we remain confident
that we are absolutely not liable in this case. AHRMA has done nothing
wrong.
However, the costs of defending this action have
been staggering, and have far exceeded estimates on which we relied.
Although we are very confident of victory in the
case, we do not have sufficient funds remaining to pursue the case in court.
Settlement negotiations were conducted earlier this
summer, but were unsuccessful within the resources available to us.
In order to preserve our
remaining resources, maintain the integrity of the association, and further
the interests of our members, we have filed a petition under Chapter 11,
which is the reorganization chapter of the U.S. Bankruptcy Code. This should
be familiar to many of our members as we routinely see major U.S. airlines
continue to operate and successfully emerge from Chapter 11, and continue to
improve their operations. As with airline passengers, members of AHRMA will
see no adverse affects.
The filing of this petition will immediately stay
the lawsuit, and pending reorganization, no further claims in the original
case can be brought against the association.
All AHRMA operations will continue with full 2007
Road Race, Off Road and Dirt Track Schedules
AHRMA further intends to take this opportunity to
revamp and modernize services, as we clear the burden of the lawsuit, and
emerge as a stronger association.
—AHRMA Board of Trustees
Posted 11/21/06
AHRMA board speaks on reorganization and litigation
Until now, your trustees
have been very limited in what we could publicly state regarding the lawsuit
brought by Team Obsolete and Mr. Robert Iannucci. We have been unable to
respond to specific issues unsuccessfully bought in court by Mr. Iannucci
based upon our legal team’s advice that such information could harm our case
and tactics. A plaintiff in this case was even observed with an apparent
concealed tape recorder at a town hall meeting during questioning of the
trustees regarding just these issues. That is an example of the kind of
behavior we are dealing with.
Now that we have filed
our petition to reorganize, we are no longer compelled to suffer the false,
misleading disinformation coming from Mr. Iannucci and his agents.
Read more...
More information
Posted 2/1/07
Chapter 11 update
AHRMA and Team Obsolete met in U.S. Bankruptcy Court, Middle District
Tennessee on Jan. 31 to argue AHRMA's motion to estimate Team Obsolete's
claim in their lawsuit. Team Obsolete is opposing motions in order to return
the case to federal district court in New York.
Arguments were heard on motions from both sides in the bankruptcy court. The
judge has taken this under advisement and will render a decision by phone
conference early next week.
Members will be notified as soon as we know anything. Additional information
about the Team Obsolete litigation and AHRMA reorganization can be found
below.
Posted 2/7/07
Court sustains AHRMA motion to
estimate Team Obsolete claim
The Bankruptcy Court for the Middle District of Tennessee (Judge Marian
Harrison) today issued its ruling on several pending motions in the AHRMA
Chapter 11 case. Based on the hearing held on Jan. 31, and the entire
record, the court denied the Team Obsolete parties' motion seeking transfer
of venue of the bankruptcy case to New York.
The Court further denied their motions for abstention or suspension, which
would have allowed the New York District Court action to continue, to fix
and liquidate whatever claim the Team Obsolete parties' might have against
AHRMA.
Finally, the Court sustained AHRMA's motion to estimate the claim in the
bankruptcy case. A conference to discuss and determine the procedures for
estimating the claim has been set for March 26.
"This is a first major step in the process to define the TO claim (if any),
set our reorganization plan to pay our creditors and emerge from Chapter
11," said AHRMA Chairman Dave Janiec.
Posted 4/3/07
Court determines procedures for claims estimation
The Bankruptcy Court for the Middle District of Tennessee held a pretrial
conference on March 26 for the purpose of determining the procedures to be
applied in the estimation of the claims of Team Obsolete et al. The Court
determined that the parties would submit Proposed Findings of Fact and
Conclusions of Law for the Purpose of Claims Estimation. The hearing on this
portion of the claims estimation process is currently scheduled to take
place in June. In this phase of the claims estimation process, the Court
will be determining what, if any, liability exists as to each of the claims
of Team Obsolete.
On March 27, the Bankruptcy Court denied Team Obsolete's Motion for
Reference to Mediation without prejudice as to Team Obsolete filing another
motion after the issues have been presented to the Court in the claims
estimation proceeding. While AHRMA does not oppose the notion of mediation
as a potential means of ultimate settlement with Team Obsolete, it opposed
the motion because of the additional time and costs associated with
mediation while simultaneously estimating the claims of Team Obsolete, which
AHRMA believes will resolve the claims of Team Obsolete.
Posted 7/20/07
AHRMA and TEAM OBSOLETE agree not to pursue or assert
claims against each other
On June 28, 2007, the Bankruptcy Court for the
Middle District of Tennessee entered an Agreed Order Regarding the Claims of
AHRMA and Team Obsolete in which the parties resolved certain issues between
them. In the Agreed Order, the parties agreed not to pursue or assert
existing claims against each other. A copy of the Agreed Order is available
on the AHRMA Web site (click here to view the
document). As a result of the Agreed Order, the Bankruptcy Court will
not conduct a hearing on the estimation of claims.
AHRMA is in process of preparing its plan of reorganization, which will be
filed with the Bankruptcy Court in August. A copy of the Plan of
Reorganization will be available on the ARHMA Web site.
Posted 8/16/07
NOTICE OF AHRMA REORGANIZATION PLAN AND DISCLOSURE
STATEMENT
On August 10, 2007, the
Bankruptcy Court for the Middle District of Tennessee entered an Order (click
here to view the Order) Conditionally Approving AHRMA’s Disclosure
Statement, Setting Hearing on Disclosure Statement and Plan, and Fixing Time
for Filing Acceptances or Rejections of Plan, Combined with Notice Thereof
(“Order”).
Because AHRMA has over 5,600 members, it is cost prohibitive to mail copies
of the Disclosure Statement and Plan of Reorganization to our members.
Therefore, our members are provided notice of the Disclosure Statement (click
here to view the Disclosure Statement) (click
here to view Exhibit A) and Plan of Reorganization (click
here to view the Plan) by AHRMA posting the documents on this Web site.
Our members are also hereby provided an opportunity to object to the Plan of
Reorganization in accordance with the terms in the Order (click
here to view the order). September 6, 2007 is the last day to object to
the Disclosure Statement and Plan.
The hearing on confirmation of the Plan and approval of the Disclosure
Statement is scheduled for September 25, 2007 at the Bankruptcy Court for
the Middle District of Tennessee in Nashville. Notice to the members through
this Web site constitutes the notice required under the Bankruptcy Code and
Bankruptcy Rules.
Dave Janiec
AHRMA Chairman
Posted 10/05
AHRMA bankruptcy plan confirmed
On September 25, 2007,
AHRMA's Plan of Reorganization was confirmed by Judge Harrison in the United
States Bankruptcy Court for the Middle District Tennessee. The Order
Confirming the Plan (click
here to view the order) was entered on October 2, 2007. The order
becomes effective in 10 days and the plan itself takes effect 30 days later.
Thus, the plan will become effective in early November 2007 and we will
begin our first round of payments to our creditors. Once we have done that,
the plan will be "consummated" and we can have the court take us out of Ch.
11 status. Given this timeline, we expect to be officially out of Ch. 11
status early next year.
As indicated in the plan, AHRMA is financially healthy and well able to meet
or improve on the payment schedules while continuing to operate our
Association. We look forward to a great 2008!
Dave Janiec
AHRMA Chairman