AHRMA 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 5½ 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

More information

• Frequently asked questions about AHRMA reorganization and litigation
• Bankruptcy memorandum
• Federal court’s BEARS decision
• Open letter to AHRMA members
• Transcript of the Judge’s decision from the January 31, 2007 hearing

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 10/05/07

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