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| Forms and Instructions - Recent Status - Chapter 11 Trustee Reports - Creditor's Comm. Updates - Contact Information |
April 6, 2004 Trustee's Report EVERGREEN SECURITY, LTD CASE NO. 01-00533-6B1 TRUSTEE REPORT TO CREDITORS' COMMITTEE April 6, 2004 Ladies and Gentlemen: My last report to the Committee was January 21, 2003. This report will not repeat my prior reports, which can be found at www.evergreencreditorscommittee.com. The following table outlines the status of the litigation:
Five of the suits against managers were settled for $1,280,000. The one pending suit will be set for trial in the coming months. The broker test case against Harold James Kime and First American Life and Health Insurance Corporation resulted in judgements against the defendants for over $192,000. After the test case the Court ordered mediation in 47 broker cases. Twenty-one mediations were held from September 2003 to January 2004. Twenty-six of the broker cases have settled for a total of $741,010. Some of the cases ordered for mediation settled without attending mediation. The cases that have not settled have been set for trial in April or will be set for trial later this year, except for a few, which will be mediated in April. The Zylka et al defendants, which are pending, include individuals and businesses who received part of the $27.7 million taken from Evergreen by William J. Zylka and James P. Conroy. Mr. Zylka pleaded guilty and Mr. Conroy was convicted in New York for their parts in the funds taken. The five pending suits are in various stages of discovery and should be tried during 2004. The twenty-two settlements produced $587,847 in cash, real estate listed for sale for $60,000, over 11.8 million shares in the OTCBB Crystal Graphite Corporation and royalty rights in a gold mine in British Columbia of over $2.7 million payable with interest. The "Other" suits include suits against a lawyer, law firms, accounting firms, investment advisory firms, custodians, trustees, consultants, directors and the owners of Evergreen. These "Other" suits are in various stages of discovery and will be tried in 2004. Two of the twelve settlements have produced $180,000 in cash. Ten of the settlements are with Surety Bank, a bank in liquidation in Nassau, Bahamas, its liquidator, directors and shareholders. Its liquidators have estimated that Evergreen will receive between $3.5 million and $4.0 million from its liquidation. They are holding $4.7 million on deposit for the liquidation, with $700,000 of claims other then Evergreen's claim. Evergreen funds in excess of $6.2 million have been deposited to the bankruptcy accounts since my appointment through March 31, 2004. Additional funds will be obtained from: the liquidation of Surety Bank, sales of stock, and sale of real estate. The pending litigation, however, will provide the most significant source of recovery for Evergreen. The Committee and the Trustee jointly filed a Plan for Reorganization of Evergreen on March 30, 2004. The reorganized Evergreen will try to maximize the recovery of funds for its creditors. The disclosure statement and confirmation hearings have been scheduled in May 2004. A copy of the Plan and Disclosure Statement will be mailed to interested parties after the Court's approval. The criminal trial for Anthony Huggins and John M. Knight was held during December 2003 in New York and ended in a mistrial on December 23, 2003. According to the New York District Attorney's office, Mr. Huggins and Mr. Knight will be retried beginning on May 3, 2004. Mr. Huggins and Mr. Knight were arrested on charges of grand larceny and other charges for taking $6.5 million from the Evergreen securities portfolio they were managing. Several creditors have questioned whether they can deduct their investment in Evergreen on their income tax return. Each creditor should consult their income tax advisor about this question, as it is a highly complex legal question, which has no simple answer. I cannot advise a creditor or the Committee on this deduction. The Committee in its second report to Evergreen creditors, discussed this matter, but gave no guidance to creditors and suggested they consult their tax advisors. If you would like to provide me with any information in this case, please mail, fax or e-mail it to me. I have listed my contact information below. You should continue to contact the Creditors’ Committee web site for information in this case. Also many newspapers have carried articles about this case. The largest collection of articles can be found at www.orlandosentinel.com. R. W. (Bill) Cuthill, Jr., CPA, CFE Chapter 11 Trustee 341 N. Maitland Ave., Suite 210 Maitland, Fl 32751 Phone 407-644-3781 ext. 235 Fax 407-644-3943 e-mail rcuthill@msn.com |
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| Official Committee of Unsecured Creditors for Evergreen Security, Ltd. |