Content area
Full Text
The creditors of the defunct appliance chain Fretter Inc. are coming after company founder Oliver Fretter.
A court hearing scheduled for Jan. 30 in U.S. Bankruptcy Court in Cleveland could give Fretter's unsecured creditors the power to sue Oliver Fretter and other former company officers and directors for $43.6 million.
That's what Fretter Inc. shareholders received in an abortive 1993 transaction that combined Fretter's 87 stores with the 182 money-losing Silo electronics stores that were previously owned by the British electronics giant Dixons plc. Oliver Fretter's personal share of that cash payment was $20.4 million.
The creditors argue that Fretter's board "knew or, in the exercise of reasonable care, should have known" that the projected costs of combining with Silo "would render Fretter insolvent and/or unable to pay its debts as they became due in the usual course of business." Therefore, the suit argues, the defendants should repay the $43.6 million to the Fretter bankruptcy estate, where it could be used to pay off creditors.
Before they can file the suit, the Fretter creditors first need to convince Bankruptcy Judge Pat Morganstern-Clarren that they should have the authority to pursue their claims.
The creditors...