Preferred Florist Network (PFN) filed Chapter 7 bankruptcy on Aug. 17, 2007 in the United States Bankruptcy Court for the District of New Jersey. The highly-anticipated bankruptcy also includes two affiliated companies, TTP, Inc. and Lower Forty Gardens, Inc., all of which are owned by Thomas Meola.
According to the filings, Joseph J. Newman has been appointed as the interim trustee in each of these cases. A first meeting of creditors is currently scheduled for Sept. 17, 2007, at 9:30 a.m. in the Office of the US Trustee in Newark, N.J., during which the debtors (presumably through Meola) will answer questions, under oath.
Creditors at the meeting can listen to the trustee's examination of the debtor and ask questions relating to the administration of the bankruptcy case. "The meeting of creditors is a useful forum to learn information first-hand about the debtor and the bankruptcy case," according to Daniel S. Lubell, a partner at Hughes Hubbard & Reed LLP, who concentrates in bankruptcy law, "It also affords creditors an opportunity to provide information to the trustee that may assist him with pursuing lawsuits or recovering assets that may not have been fully disclosed by the debtor."
Meola told the Star-Ledger, a New Jersey newspaper, that overhead costs, including defending lawsuits, exceeded revenue. "Business with no profit is no business," Meola said, noting operations ceased June 12 and that 22 people lost their jobs.
According to the petitions, TPP, better known as Flowers with Gifted Elegance, has close to $1.2 million in liabilities, Preferred Florist Network has more than $900,000 in liabilities and Lower Forty Gardens has more than $350,000 in liabilities. None of these entities has listed any assets except Preferred Florist Network, which listed a $737,000 receivable from bankrupt TTP as its only significant asset.
"Judging from the debtors' petitions, it does not appear that creditors will be paid anything in these cases absent the trustee achieving meaningful recoveries by pursuing contingent insurance claims, tax refunds and other lawsuits," said Lubell. "In my experience, this may require creditors joining together to form a committee, represented by counsel, who could assist the trustee with his investigation."
PFN was the network of florists that filled orders for Meola's order-gathering company, based in Randolph, N.J., which placed ads in yellow pages across the U.S. under local phone numbers. Customers calling the local listing were connected with a call center in New Jersey, many times under the impression they were still dealing with somebody local, according to many florists. Orders were filled by PFN florists, who would bill the network for 75 percent of the retail value of the order.
Amber Baxter, owner of Gibney-Sims Flowers in Hannibal, Mo., is one of many florists who are owed money by PFN.
"Payments were coming in fine up until February," Baxter says. "We tried contacting them by phone several times but never received a call back. We even tried faxing them and sending our bills in the mail, but they just came back to us. It's all been very frustrating."
John Satagaj, a Washington, D.C., attorney and president of the Small Business Legislative Council, says florists can submit a claim against PFN as a creditor and possibly recover some of their money. But they'd most likely be considered an "unsecured" creditor and would have to wait until all the "secured" creditors have been paid before receiving compensation.
Baxter, who is owed less than $6,000, says her lawyer has advised her that it might not be worth the time or money to take any action against PFN.
John Satagaj offers 15 minutes of free legal advice on employee-related matters to SAF members; take advantage of this SAF member service by calling Satagaj at 202-639-8500.
--Kori Kamradt
kkamradt@safnow.org
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