SIST files bankruptcy ruling appeal

The Shawano Leader/October 4, 2009

Attorneys for the Samanta Roy Institute of Science and Technology Friday filed an appeal of a Sept. 22 U.S. Bankruptcy Court ruling which dismissed the organization’s petition for bankruptcy protection.

The appeal was filed on Friday in U.S. Bankruptcy Court, District of Delaware, where SIST filed for Chapter 11 reorganization in March.

The appeal apparently temporarily staves off several pending lawsuits against SIST and its subsidiaries involving more than $4 million in claims. Those cases include the foreclosure sale of three Shawano gas stations and a defamation suit filed by Shawano Mayor Lorna Marquardt.

On Sept. 22, U.S. Bankruptcy Judge Kevin Gross ruled a dismissal of SIST’s petition was "mandatory" given SIST’s mounting financial losses, the absence of a plan to rehabilitate, lengthy inaction in obtaining financing and a lack of effort to maximize the value of assets for the benefit of creditors. Following the dismissal ruling Sept. 22, SIST was provided a 10-day window to file an appeal.

Among the issues raised in testimony during a hearing the day prior to the dismissal ruling was the fact the debtors had not filed tax returns since 2004, including a 2008 tax return due after the bankruptcy petitions were filed, Gross wrote. Failure to file tax returns after the date of an order for relief is one of several U.S. Bankruptcy Code criteria Gross cited in issuing the dismissal ruling.

Gross also said substantial or continuing losses to the value of the estate, the absence of the likelihood of rehabilitation and gross mismanagement of the estate were also factors requiring the dismissal of the bankruptcy petition.

Along with the civil cases, the unsecured creditors listed in the bankruptcy filing show SIST and its subsidiaries have more than $13.3 million in claims from various persons and entities.

Among their debts, SIST and its subsidiaries owe the city of Shawano about $72,975 including personal and property taxes, room taxes and interest on the unpaid debt as of Tuesday, according to the city clerk’s office. Shawano County is owed nearly $500,000 in taxes on properties owned by SIST and several of its subsidiaries.

SIST and its subsidiaries own a number of Shawano area businesses, including the three gas stations, the AmericInn and Kiryat hotels, Spirit of the Northwoods, Midwest Gift and Fudge Shop, and USA International Raceway. They also own a number of commercial properties in the city, some of which are leased to other businesses.

SIST representatives have consistently maintained the businesses were started to fund the operation of an international boarding school, which the organization proposed building in the town of Wescott.

SIST also has a new attorney representing it in the bankruptcy petition. The Wilmington, Delaware office of Cohen Seglias Pallas Greenhall & Furman PC has taken over the case from Eric Monzo of Morris James LLP in Wilmington.

Cohen Seglias, which filed the appeal, has seven offices in four states: Pennsylvania, New Jersey, West Virginia and Delaware, according to the firm’s website.

There was no response by deadline to an after-hours e-mail seeking comment from the lead attorney for SIST, Robert K. Beste Jr.

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