Skip to content Skip to left sidebar Skip to right sidebar Skip to footer

STORYTELLING SNAFU: Leaders miscalculate what they owe

Creditors will receive a lower-than-expected payout from the International Storytelling Center due to a miscalculation in the total amount of claims, a mistake that will also take the organization back to the courtroom.
ISC Counsel Mark Dessauer filed a request May 7 to modify the organization’s Amended Disclosure Statement and Plan of Reorganization that was approved in March after more than a year in Bankruptcy Court.
According to the modification, the ISC originally estimated its allowed unsecured claims would range from $1.75 to $2 million.
Unsecured creditors are among those whose claims will be modified in terms of principal, interest, length of time for payment, or a combination of the above.
Under ISC’s reorganization plan, unsecured creditors will receive a pro rata distribution of $225,000 paid in three installments over a two-year period.
ISC estimated creditors would receive approximately 11 to 13 percent of the money owed to them. Now it appears that number will be more like 8 percent.
In preparing to make its initial distribution, ISC “determined it had inadvertently miscalculated” the amount of allowed unsecured claims.
The correct number is more than $2.7 million, which will reduce the creditors’ dividend to 8.31 percent.
Dessauer said it is common in a bankruptcy case to not have the exact amount of unsecured creditors.
“The important thing to remember is those creditors have now been included,” he said.
According to Dessauer, creditors who voted in favor of the plan of reorganization ISC filed in February now have the right to rescind their votes due to the miscalculation.
The modification states the miscalculation resulted from three claimants or sets of claimants.
The $153,277 claim from First Tennessee Bank was not included in the computation because it was paid by four individual guarantors prior to the filing of the plan.
Since the confirmation, claims have been filed by ISC on behalf of guarantors Lynda Wexler, James Powell, Robert Summers and Juanita Summers.
The $244,400 claim from New Peoples Bank was not included in the total due to unsecured creditors because of the mistaken impression that the claim had been waived.
According to the modification, this misunderstanding was based in part on New Peoples Bank’s failure to file a proof of claim.
Also not included was $235,700 owed to an additional 23 unsecured creditors who had not filed claims but whose claims were not disputed.
These claims were erroneously excluded from the estimated amount because of an “inadvertent oversight.”
Because the modification does not reduce the approved total distributed to unsecured creditors, ISC believes the court should confirm the plan.
A hearing is scheduled for Tuesday, June 5, in the Bankruptcy Courtroom of the James H. Quillen United States Courthouse in Greeneville.