CERTIFIED PUBLIC ACCOUNTANTS
 
FRAUD EXAMINERS  
 
RESTRUCTURING ADVISORS

 

Creditor

LTC Holdings, Inc.

LTC Holdings, Inc.

LTC Holdings, and its affiliated debtors (LTC), a Detroit based civil engineering and construction firm, filed for Chapter 7 Bankruptcy protection in on May 2, 2014. At the time of the filing, the various debtors had more than $185 million in combined assets.

MANAGEMENT LIABILITY POLICY

Each of the six debtors have listed as an asset, a $10 million interest in a management liability policy. In fact, each entity shares the same insurance policy with a $10 million aggregate limit. Currently, the Trustee has notified the Insurance carrier of its intent to file a claim against the policy;however, the Trustee is still in the process of evaluating and quantifying damages

CORPORATE INCOME TAX RETURNS

The 2013 Corporate tax return has been filed, resulting in an expected corporate income tax refund of $5,324,493. The return is currently subject to review by the Internal Revenue Service.

The Trustee was also able to secure a state sales tax refund from the State of Georgia for $122,646.

CASH ON HAND

To date, the Trustee has secured the turnover of $373,594 from the debtor bank accounts.

BUSINESS INTEREST

LTC also holds security interest in several debtor and non-debtor entities. The Trustee is in the process of determining the value of these non-debtor entities. To date, the Trustee has sold the estates interest in LTC Japan for $251,802.14.

ACCOUNTS RECEIAVABLE (A/R)

Based on the debtors schedules, the various debtor entities list a total of approximately $28.1 million in accounts receivable from various projects. The Trustee is currently in the process of evaluating the collectability of these accounts. To date, the estate has collected $88,089.62. Most of these receivables are due from the U.S. Government or bonding companies who both assert set-offs due to the inability of the Debtor to complete the construction.

REQUEST FOR EQUITABLE ADJUSTMENTS

There are currently several claims against the United States for equitable adjustments for various projects. Currently, there are more than $30 million in claims filed against the United States. There are an additional 22 cases for which the claim amount has not been quantified. These requests are currently being evaluated for collectability (See note under A/R Concerning set-offs).

THE WEATHERFORD ACTION ((DISPUTE WITH WEATHERFORD OIL TOOL MIDDLE EAST, LTD)

Prior to the petition date, the Debtors commenced a lawsuit against Weatherford Oil before the London Council of International Arbitration. The affirmative claims asserted on behalf of the Debtors' estates in the Weatherford action are for collection of unpaid amounts, change orders, delays, etc., arising from Weatherford's refusal to pay the Debtors for work performed and services rendered under a subcontract agreement between LTC and Weatherford for a project in the Garraf Oil Field. The estimated value of the affirmative claims asserted total in excess of $50,000,000. Weatherford has asserted counter claims against LTC for $12,000,000 on account of disputed change orders.

Currently this case is in arbitration. It is too early to estimate a potential outcome and benefit to the estate.

REAL ESTATE

The estates currently own property and equipment located at 5826 Baldwin Lane, Willison, ND. Per the Schedules, the estimated value of the property is 1,000,000. The Trustee has signed a letter of intent and is finalizing an agreement of sale which has a due diligence period.

PROPERTY PLANT AND EQUIPMENT

The Trustee is currently attempting to liquidate various vehicles, machinery and equipment. Per the Bankruptcy Schedules, LTC listed approximately $1,061,479 in Vehicles. To date, the Trustee has recovered $577,297.86 in Vehicle Sales. Much of this equipment is in Afghanistan, Iraq and Guantanamo Bay and will be difficult to sell.

LICENSES

LTC also holds Indefinite Delivery Indefinite Quantity Licenses with the United States Government. The Trustee has received an offer for this asset but negotiations broke down after the Trustee requested proof of funds be provided by the buyer.

PREFERENCES

The Trustee is currently evaluating payments made within 90 days of the petition date. Based on a preliminary review by the Trustee and his professionals, the Trustee has identified 152 Vendors who are potential targets for adversary actions. The gross transfers in question total $18,274,143.01.

Professional Fees - Orders Outstanding:

  • Docket #388 - Custom Mechanical Systems Corp - $249,798.76
  • Docket #361 - Doeren Mayhew, CPAS - $18,725.00