Creditors are stepping up pressure on Venture Holdings Co. LLC founder Larry Winget, giving federal officials documents alleging fraudulent financial reports, even as a chief lender moves to foreclose on some Winget properties.
Creditors are preparing to sell Venture, but first want to link ownership and control of Winget's assets currently in bankruptcy with those of related companies not included in the Chapter 11 filing. Bank One NA, acting as an agent for Venture's lenders, filed suit April 13 to foreclose on those other assets.
Lawyers for Winget said they were reviewing the bank's filing and had no immediate comment. In the past, though, lawyers Ralph R. McKee and Nancy Mitchell have said that Venture's financial arrangements were disclosed fully to creditors before either of them signed on to work with the firm.
The injection molding operations of the Fraser, Mich.-based auto supplier filed for Chapter 11 protection in U.S. Bankruptcy Court in Detroit in March 2003.
On April 5, the creditors sued Winget, members of his family and other holdings alleging that Winget siphoned $314 million out of the molding operations through excessive payments to those separate holdings.
The creditors also have given the Securities Exchange Commission's Division of Enforcement a report prepared by external auditors describing the transactions in question and calculating the value of the transfers that are the subject of the lawsuit. In their SEC filing, they said the auditors' report shows ``that financial information concerning the debtors ... as far back as at least 1998 is unreliable and should not be relied upon by investors.''
Venture Holdings was privately owned, but had public bonds requiring it to file SEC reports.
Chicago-based Bank One does not intend to disrupt the businesses of the debtors or the Winget entities, representatives for the creditors said in a written statement.
Also, the bank will require any third-party buyer to accommodate the debtors ``in fashioning a plan of reorganization.''
It is clear by the latest legal action that there are communication problems among Winget, the creditors and other principal parties in the case, noted Martin Fried, a Southfield, Mich.-based bankruptcy lawyer who is not involved in the case.
``It's obvious that they're not talking anymore or able to make any agreements,'' he said.