Friday, August 8, 2008

Breaking the Silence

For months, this private citizen has remained silent on the issue of the Advocacy & Resources Corporation bankruptcy[1] and the subsequent lawsuit filed by Michael Collins, Trustee. During this period, the Herald Citizen Newspaper in Cookeville, Tennessee has filed numerous reports as to the status of the organization, its’ reorganization, the intentions of its’ ‘investor/rescuer’ group, leading the community to speculate as to whether the likelihood exists that the intervention currently underway will be successful and wondering about the causes.

Over the months, I have watched the facts of this case become submerged and subordinated to salacious charges lodged as a matter of course by the parties to the bankruptcy proceedings. Interestingly, these allegations have addressed everything except the facts of these matters. Claims have been made that the inside directors:
· caused corporate opportunities which belonged to ARC to be usurped
· “cooked the books” to manipulate increases in wages
· breached their fiduciary responsibility to govern the business activities of the not for profit organization
· created outside business interests to personally benefit from the activities of the not for profit agency they governed
· shifted revenue to outside business interests when they understood that the financial position of the agency was “headed for the tank”

While certainly spectacular and designed to provoke an extremely emotional response from the community in support of the current operating group’s effort while creating a ‘smokescreen’ for their activities, the records of the organizations in question do not support these allegations when considered in entirety. Further, regulatory imperatives provide clear guidance and support for the decisions made by agency leadership in a rapidly changing and challenging business environment over the nineteen year period that leadership was at the helm. Their requirements have also been conveniently omitted from the overall conversation by the litigants. As a result of these allegations, omissions and deletions of record and fact, expectations have been raised about the intentions of the parties to the current reorganization effort, great harm has been done to the organization’s ability to financially recover, the resources of a remarkable community mental health program have been raided, and the reputations of a skilled management group have been purposefully and needlessly libeled. While it may be perceived by some as “just business,” it should be noted that, bent on removing the influence of the former management team of fifteen persons, the current operators and legal counsel have impaired the very assets and recovery of corporate knowledge necessary to restore the ailing organization to its’ previous health as a community mental health services provider with important customer and system relationships. The following reinserts the regulatory, decision-making environment back into the discussion and details the facts of these matters. Within each topic you will find a summary of events, a glossary of terms, and links to key regulatory references and key
[1] Advocacy & Resources Corporation, Debtor Case N0. 206-03067, United States Bankruptcy Court, Middle District of Tennessee, Cookeville Division. Chapter 11, Judge Lundin Presiding.

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