The trustee will conduct a meeting of all interested investors to answer questions about the settlement he has reached with Diane Siskey and Lane Williamson, as the administrator for Rick Siskey’s decedent’s estate. PLEASE RESERVE YOUR QUESTIONS ABOUT THE SETTLEMENT FOR THIS MEETING. The meeting is scheduled for June 20, 2018 at 2:00 p.m. at the office of the U.S. Bankruptcy Administrator located at 402 West Trade Street, Suite 205, Charlotte, NC 28202. You are encouraged to attend this meeting to find out more information about the Trustee’s settlement.
THIS COMMUNICATION HAS NOT BEEN APPROVED BY THE BANKRUPTCY COURT AND IS NOT INTENDED TO SOLICIT VOTES IN FAVOR OF OR AGAINST THE PLAN DESCRIBED HEREIN. NO CREDITOR SHOULD RELY UPON OR REFERENCE THIS COMMUNICATION IN DETERMINING WHETHER TO VOTE ON THE PLAN. THE TRUSTEE IS NOT SOLICITING VOTES IN FAVOR OF A PLAN AT THIS TIME.
Introduction. Mr. Grier as bankruptcy trustee has filed papers reflecting a settlement agreement with Diane Siskey and Lane Williamson as Administrator of Rick Siskey’s probate estate that will ask the Bankruptcy Court to (a) approve an interim distribution of $14,500,000 to investors in TSI, WSC and SPP, which could be paid as early as July and could amount to 39% of each investor’s base claim; (b) provide an ultimate distribution to investors in Rick Siskey’s Ponzi Scheme which is much higher; and (c) avoid litigation with Diane Siskey and others. Under Bankruptcy Law, the steps to accomplish these goals are complicated and the papers the trustee has filed reflect those complications. This outline attempts to summarize the main points of the settlement and to describe generally the steps necessary to obtain court approval and a possible timeline. This outline is of course no substitute for the papers filed by the trustee.
Assets.
Diane Siskey has agreed to turn over the following funds:
| Life insurance proceeds | 39,756,730.38 | |
| Net proceeds from sale of house | 1,822,636.29 | |
| Net proceeds from sale of personal property | 75,585.00 | |
| Total | 41,654,951.67 |
The Rick Siskey probate estate is not settled but is estimated to have the following assets:
| Cash on hand | 2,153,556.00 | |
| 21.38% interest in Sharon Rd Properties | 250,000.00 | |
| Home Run Holdings | 3,000,000.00 | |
| Cash value life insurance | 100,000.00 | |
| Ballantyne Clubdominium lien | 170,000.00 | |
| 98% interest in Siskey Industries | undetermined | |
| Total | 5,673,556 |
The three bankruptcy estates hold the following assets:
| Cash on hand | 294,000.00 | |
| WSC’s 25% interest in Ballantyne Clubdominiums | 180,000.00 | |
| Total | 474,000.00 |
Grand total: $47,802,507.67
There is a possibility that the Rick Siskey Estate interest in Home Run Holdings and Siskey Industries could bring in more funds than shown above, but we won’t know that for a while.
Liabilities.
| TSI, WSC & SPP allowed claims | 36,556,094.90 | |
| Probate estate claims – this number is an estimate | 6,554,459.00 | |
| Outside investor claims | 805,946.81 | |
| Total investor claims | 43,916,500.71 | |
| Less portion of Michael Salamone claims included above but paid outside of settlement by Diane Siskey | -2,250,000.00 | |
| Plus estimated administrative expenses | 2,000,000.00 | |
| Total Liabilities | 43,666,500.71 |
Stone Street Partners, Paul Porter & Dawn King (together, the “Stone Street Claimants”) have asserted claims against Diane Siskey, the Rick Siskey probate estate and the bankruptcy entities of around $26,000,000. Diane Siskey, the Administrator of the Rick Siskey Estate, and the Bankruptcy Trustee do not view those claims as allowable and have objected to those claims. Those claims will either be resolved by settlement or by the courts.
The IRS may have a claim against the Rick Siskey probate estate arising out of unpaid income tax in an unknown amount.
Chapter 11 Plan. Mr. Grier as Bankruptcy Trustee, Mr. Williamson as Administrator of the Rick Siskey probate estate and Diane Siskey have negotiated a proposed chapter 11 bankruptcy plan, the purpose of which is to distribute as much of the assets shown above as possible to investors in exchange for a release of Diane Siskey and certain other parties (the “Diane Siskey Release”). The chapter 11 plan creates the following:
Estate Liquidating Trust, to be funded by a $20,000,000 distribution from Diane Siskey and 50% of the probate estate assets after setting aside a reserve, to be distributed pro-rata to investors in TSI, WSC & SPP. Diane Siskey has consented to an interim distribution of $15 million from this $20 million to investors in TSI, WSC & SPP (subject to approval by the Bankruptcy Court), and the Trustee proposes to pay out $14.5 million of this sum to investors.
Residual Payment Trust, to be funded by the remaining assets shown, to provide a catch-up distribution to investors with probate estate claims and outside investor claims, so that they receive the same percentage distribution as investors in TSI, WSC & SPP, and then pro-rata to all investors who “opt-in” to participate in this distribution signing the Diane Siskey Release.
The plan contemplates the creation of a holdback from the Residual Payment Trust to fund the costs of defense or settlement of any governmental claims against Diane Siskey, the costs of defense or settlement of the claims asserted by the Stone Street Claimants, and the costs of defense or settlement of any claims brought by investors who do not sign the Diane Siskey Release. The size of the litigation holdback will depend on the number of investors who do not sign the Diane Siskey Release.
The ultimate percentage distribution to investors will depend on the claim of the Stone Street Claimants, the net assets of the Rick Siskey probate estate, the value of the remaining illiquid assets of the Rick Siskey probate estate, and how much of the holdback funds are returned to the Residual Payment Trust.
Interim Distribution. Mr. Grier has filed motions asking the bankruptcy court to approve an interim distribution of $14.5 million and to convert the cases of TSI, WSC and SPP to chapter 11. Those motions are scheduled for hearing on June 25. Mr. Grier is talking with the Stone Street Claimants to seek their consent to the interim distribution. That distribution could take place as early as July, depending on the bankruptcy court and the consent of the Stone Street Claimants. If the Stone Street Claimants consent to the interim distribution, investors could receive an approximately 39% distribution on their allowed base claims.
Additional Payments. Once the court converts the bankruptcy cases to chapter 11, Mr. Grier will file the plan and ask the court to approve a Disclosure Statement. Creditors are entitled to notice of at least 25 days on the Disclosure Statement. Once the court approves a Disclosure Statement, the Trustee will send the Disclosure Statement, the Plan and a ballot to all creditors, solicit votes on the plan and ask the court to confirm the plan. Creditors are entitled to at least 25 days’ notice of this process. Once a plan is confirmed, the Trustee can begin to make additional payments. There of course could be delays in any of these processes. Confirmation of the plan could occur as early as the fall of 2018. Additional payments will be made in stages at plan confirmation; as assets from the Siskey probate estate are available; and as the holdback funds are released. Final payments will likely be several years from now.
Benefits of Settlement. This chapter 11 plan will provide for a material distribution to investors while limiting the expense, delay and risk inherent in litigation with Diane Siskey and others.
Disclosure Statement. Mr. Grier will ask the bankruptcy court to approve a disclosure statement to be sent to all investors. Once the court approved disclosure statement is distributed, investors will have the opportunity to vote on the chapter 11 plan, including the release of Diane Siskey. If the bankruptcy court confirms the chapter 11 plan, Mr. Grier could make distributions in addition to the interim distribution during the fall of 2018.
Investor Meeting. Mr. Grier will conduct a meeting of all interested investors on June 20, 2018 at 2:00 p.m. at the office of the U.S. Bankruptcy Administrator located at 402 West Trade Street, Suite 205, Charlotte, NC 28202, in order to answer questions about the settlement with Diane Siskey. You are encouraged to attend.
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