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PAUL D. MOORE
E-MAIL: pdnwore9duanemorris.com
www. duanemorris.com
April 12, 2002
BY HAND
Clerk's Office
United States Bankruptcy Court
1101 Thomas P. 0'Neill,Jr.
Federal Office Building 10 Causeway Street Boston, MA 02222-1074
RE: V&M Management, Inc., Ch. 11 Case No. 96-10123-CJK
Dear Sir or Madam:
Enclosed For filing in the above-referenced case please find Creditors' Trustee's Pretrial Memorandum With Respect to Remanded Motion of Alphonse Mourad to Allow Administrative Expense Claim Late and a related Certificate of Service.
Kindly acknowledge receipt of the above by date .stamping the enclosed copies and returning same to our waiting messenger.
Thank you for your attention to this matter.
Very truly-yours,
Paul D. Moore
PDM:mmm:Bos\64497.i
Enc.
cc:
Certificate of Service Mr. Stephen S. Gray Mr. Craig R. Jalbert
DUANE MORRIS LLP
470 ATLANTIC AVENUE. SUITE 500 BOSTON. MA 02210
UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS
In re:
V&M MANAGEMENT, INC.,
CHAPTER 11
CaseNo.96-10123-CJK Debtor.
CREDITORS' TRUSTEE'S PRETRIAL MEMORANDUM WITH RESPECT TO REMANDED MOTION OF ALPHONSE MOURAD TO ALLOW ADMINISTRATIVE EXPENSE CLAIM LATE
Pursuant to this Court's October 31, 2001 Pretrial Order on Remanded Motion of Alphonse Mourad to Allow Administrative Claim (the "Pretrial Order"), Stephen S. Gray, as Creditors' Trustee (the "Creditors' Trustee") pursuant to the Joint Plan of Reorganization of Stephen S. Gray, Chapter 11 Trustee, Mandela Residents Cooperative Association, Inc., Beacon Residential Properties Limited Partnership and Winter Hill Federal Savings Bank (the "Plan"), confirmed by order of this Court dated September 26,1997 (the "Confirmation Order"), hereby files his Pretrial Statement with respect to the remanded Motion of Alphonse Mourad to Allow Administrative Expense Claim Late (the "Administrative Expense Motion").
Creditors' Trustee's Witnesses
In opposition to the Administrative Expense Motion, and in rebuttal of any evidence Mr. Mourad may adduce to meet his burden of proof with respect to such motion, including, without limitation, that Mr. Mourad holds an otherwise valid administrative expense claim, that cause exists for this Court to permit the late filing of such claim, that there exists "excusable neglect" for such late filing, that the Trustee was in any respect negligent with respect to any duty owed to Mr.
BOS\64244.
Mourad, and that any such neglect caused any damage or harm to Mr. Mourad, the Creditors' Trustee intends to call the following witnesses:
1) Stephen S. Gray, as Creditors' Trustee and formerly the Chapter 11 Trustee of the estate of the debtor V&M Management, Inc., d/b/a Mandela (the "Debtor").
2) Craig R. Jalbert of Verdolino & Lowey, P.C., accountant to the Creditors'
Trustee and to Mr. Gray in his prior capacity as Chapter 11 Trustee. Expected Testimony of the Witnesses. In accordance with the Pretrial Order, the following is a brief statement as to the substance of the testimony of each of the following witnesses to be called by the Creditors' Trustee:
1) Stephen S. Gray.
At the outset, Mr. Gray will present general background testimony concerning his appointment as Chapter 11 Trustee, his background and experience as a trustee in cases under Chapter 7 and Chapter 11 and his administration of the Debtor's Chapter 11 case. Such testimony is expected to include, among other things, information concerning the Debtor's assets and liabilities, Mr. Gray's efforts to formulate a plan of reorganization and the active role which Mr. Mourad took throughout the Debtor's Chapter 11 case.
With particular regard to the issues raised in the Administrative Expense Motion, Mr. Gray is expected to testify concerning the Debtor's status, throughout the Chapter 11 case, as a Subchapter S corporation for taxation purposes and that Verdolino & Lowey, P.C., and Craig Jalbert of that firm, were retained by Mr. Gray, with this Court's approval, to provide accounting and other services, including, in particular, tax return preparation and advice. Mr. Gray will also testify that he timely paid all expenses arising during the administration of the Debtor's Chapter 11 case that Mr. Gray was authorized to pay under applicable law. Mr. Gray also is expected to testify BOS\64244.1 concerning the Plan, the confirmation process and Mr. Mourad's involvement therein, and the Plan's provisions with respect to the payment of claims against the estate, including timely filed and allowed administrative expense claims. He also will testify as to consummation of the Plan after entry of the Confirmation Order on September 26,1997, the assets available for distribution pursuant to the Plan and how and when those assets were disbursed after entry of the Confirmation Order and prior to the date Mr. Mourad filed the Administrative Expense Motion. Mr. Gray will testify that, both as Chapter 11 Trustee and as Creditors' Trustee, he has paid all taxes required to be paid on behalf of the Debtor, its estate and the Creditors' Trustee. He will testify that, as of the date of Mr. Mourad's Administrative Expense Motion, all but $70,000 or so of funds available to the estate had been disbursed to holders of allowed claims and that such remaining funds were held in reserve for payment principally of the continuing costs of administering the Creditors' Trust, in large part addressing issues and related appeals which Mr. Mourad continued, and continues, to pursue. Mr. Gray will also testify as to the amounts remaining in reserve as of the time of trial.
2) Craig R. Jalbert.
Mr. Jalbert likewise will provide general background concerning his and Verdolino & Lowey, P.C.'s retention as accountants to Mr. Gray, as Chapter 11 Trustee, to provide, among other things, tax advice and to prepare necessary state and federal tax returns. He will also testify concerning his and Verdolino & Lowey, P.C.'s background and experience in providing such services. Mr. Jalbert also will testify that Verdolino & Lowey, P.C., under Mr. Jalbert's supervision, assembled and prepared all necessary federal and state tax returns on behalf of Mr. Gray, as Chapter 11 Trustee, and the Chapter 11 estate. He will likewise testify that, at all relevant times, the Debtor BOS\64244.1 remained a Subchapter S corporation for taxation purposes, that all such returns were prepared accordingly, and that any tax liability of the estate was paid.
Mr. Jalbert will also testify that Verdolino & Lowey, P.C., prepared and delivered to Mr. Mourad the appropriate S Corporation Schedule K-l forms necessary for Mr. Mourad to file his individual federal and state tax returns. He will also testify that shareholders of a Subchapter S corporation are responsible to report and pay on their pro rata share of Subchapter S corporation income and, accordingly, that Mr. Mourad was and is responsible for preparing and filing his individual tax returns, including the information provided on the aforementioned Schedule K-l's, together with any and all other personal income and deductions Mr. Mourad may have. He will also testify that whatever tax liability Mr. Mourad incurred on account of the Debtor's income and expenses was or is attributable to the "pass-through" nature of the Subchapter S corporation, which Mr. Mourad elected, and that none of that liability arose as a result of any actions or omissions by Mr. Gray, including any alleged failure of Mr. Gray to pay expenses of the Chapter 11 estate. List of Exhibits
The following is a list of all of the exhibits, copies of which are attached hereto, numbered sequentially in the sequence proposed to be offered at trial by the Creditors' Trustee.
1. Disclosure Statement With Respect to Joint Plan of Reorganization of Stephen S.
Gray, Chapter 11 Trustee, Mandela Residents Cooperative Association, Inc. Beacon Residential Properties Limited Partnership/and Winter Hill Federal Savings Bank, dated June 27,1997.
2. Joint Plan of Reorganization of Stephen S. Gray, Chapter 11 Trustee, Mandela Residents Cooperative Association, Inc., Beacon Residential Properties Limited Partnership and Winter Hill Federal Savings Bank, dated June 27, 1997.
3. Addendum to Disclosure Statement and Joint Plan of Reorganization of Stephen S. Gray, Chapter 11 Trustee, Mandela Residents Cooperative Association, Inc., Beacon Residential Properties Limited Partnership and Winter Hill Federal Savings Bank, dated August 4, 1997. BOS\64244.14
4. Order Confirming Joint Plan of Reorganization of Stephen S. Gray, Chapter 11 Trustee, Mandela Residents Cooperative Association, Inc., Beacon Residential Properties Limited Partnership and Winter Hill Federal Savings Bank, dated September 26,1997.
5. Docket Report from January 8,1996 to February 14, 2002.
6. Motion to Allow Administrative Claim of Alphonse Mourad Late, dated September 17,1998.
7. Interim Report on Administrative Progress, dated October 15,1998.
8. Motion for Entry of Final Decree Closing Bankruptcy Case, dated November 10, 1998.
9. Affidavit of Stephen S. Gray in Support of Motion for Entry of Final Decree Closing Bankruptcy Case, dated November 10, 1998.
10. Amended Motion for Entry of Final Decree Closing Bankruptcy Case, dated November 19,1998.
11. Amended Affidavit of Stephen S. Gray in Support of Motion for Entry of Final Decree Closing Bankruptcy Case, dated November 18, 1998.
12. Order on Amended Motion for Final Decree, dated December 23, 1998.
13. Memorandum of Decision on Amended Motion for Final Decree, dated December 23,1998.
14. Creditors' Trustee Statement Concerning Remanded Motion of Alphonse Mourad to Allow Administrative Claim Late, dated July 18, 2000.
15. V&M Management, Inc. 1999 Form 1120S U.S. Income Tax Return for an S Corporation.
16. 1999 Form 1120S Schedule K-l for Alphonse Mourad, Shareholder.
17. V&M Management, Inc. 1998 Form 1120S U.S. Income Tax Return for an S Corporation.
18. 1998 Form 1120S Schedule K-l for Alphonse Mourad, Shareholder.
19. V&M Management, Inc. 1997 Form 1120S U.S. Income Tax Return for an S Corporation, BOS\M244,1.
20. 1997 Form 1120S Schedule K-l for Alphonse Mourad, Shareholder, with attached August 20,1998 Verdolino & Lowey transmittal letter.
21. V&M Management, Inc. 1996 Form 1120S U.S. Income Tax Return for an S Corporation.
22. 1996 Form 1120S Schedule K-l for Alphonse Mourad, Shareholder.
23. V&M Management, me. 1995 Form 1120S U.S. Income Tax Return for an S Corporation.
24. Motion for Order Authorizing Chapter 11 Trustee to Employ Verdolino & Lowey, P.C. as Accountant, pro tune to May 2, 1996.
25. Affidavit of Keith D. Lowey in Support of Application for Employment.
26. Appearance of Alphonse Mourad, dated October 17,1996.
The Creditors' Trustee reserves his right to seek leave of this Court to submit additional exhibits to rebut evidence introduced by Mr. Mourad.
Paul D. Moore (bbo #353100) DUANE MORRIS LLP 470 Atlantic Avenue, Suite 500 Boston, Massachusetts 02210 (617)289-9200
Dated: April 12, 2002