Most of the time companies go bankrupt because of losses sustained during normal business ventures. Occasionally, however, firms file for commercial bankruptcy after dubious business deals unravel and cause financial chaos. In these situations, details often emerge about the inner workings of the companies in question; sometimes, criminal charges result.
When Revstone Industries LLC — an automotive supplier — filed for Chapter 11 bankruptcy protection in December 2012, the filing rekindled interest in the company’s intriguing financial moves over the course of the previous decade and beyond. According to papers filed by the government against Revstone, its series of acquisitions, mergers and loans had one thing in common: keeping the company afloat while funding its founder’s allegedly lavish lifestyle.
Revstone’s founder is currently under federal investigation over additional civil and criminal charges. Specifically, he has been accused of using approximately $34.6 million in employee pension funds to finance prohibited loans to other companies in his portfolio. Allegedly, he also used the funds to buy property and pay expenses.
Other accusations levied against Revstone’s chairman include a contract dispute that was filed in 2001 and remains active. The judge in that case determined that the man had deliberately drained financial assets from several trusts over approximately three years to avoid paying a court judgment. The chairman is also accused of using the trust money to fund his personal expenses.
Although most business bankruptcy cases aren’t as controversial as Revstone’s, the investigations that take place in the course of bankruptcy proceedings may still uncover unpalatable facts. Because of the complex legalities involved in commercial bankruptcy, it can be in the best interests of business owners in Tennessee to seek as much information as possible about their options before proceeding.
Source: Crain’s Detroit Business, “As supplier empire falls, a money puzzle unravels,” Dustin Walsh, Feb. 10, 2013
