A federal official has requested that John Coleman’s ongoing bankruptcy case be converted from Chapter 11 to Chapter 7.
Acting U.S. Trustee David Asbach made the request, which was filed Tuesday. U.S. trustees are agents of the Department of Justice and responsible for monitoring bankruptcy cases.
Coleman, president of Express Grain Terminals, filed for bankruptcy separately from the now-defunct company in September 2021.
Coleman has more than $92 million in claims against him. UMB Bank, Express Grain’s largest creditor, holds him responsible for $70 million on which the company defaulted.
The bank, through a court order, was successful in preventing the debt owed to it from being discharged, since Coleman had not filed timely responses to UMB’s claims, according to the order.
A Chapter 11 filing allows for the debtor to negotiate with creditors to reduce the debt without liquidating assets. In a Chapter 7 filing, the debtor’s assets are sold off to pay creditors.
In the request, Asbach writes that there has been little activity in Coleman’s bankruptcy case for the last two months. Asbach said Coleman’s property assets have been sold and the proceeds are being held in an account inaccessible to Coleman.
In November, Coleman was charged with six counts of fraud by federal prosecutors and six counts by state prosecutors.
“Currently there is no disclosure statement or plan filed,” Asbach’s motion said. “Considering the multiple criminal indictments entered against Debtor, there is no reasonable likelihood for reorganization.”
Asbach also notes that no operating reports have been filed by Coleman since September. These reports are required as part of Chapter 11 proceedings.
Coleman appealed to the bankruptcy court last year to convert his case from a Chapter 11 filing to Chapter 7. Judge Selene Maddox rejected those pleas in March. She said Coleman’s conduct — which included skipping out on one meeting with creditors and not answering questions in another — factored into her decision.
Coleman would eventually meet with his creditors but pleaded the Fifth Amendment during the proceedings, according to minutes filed in the court docket.
A court-appointed examiner in Coleman’s bankruptcy case, Albert Altro, submitted an analysis of Coleman’s finances to the court last fall.
“While the report is thorough and suggests additional avenues for investigation of potentially fraudulent transactions, the report ultimately does not report a finding of fraud or the discovery of previously undisclosed assets,” Asbach’s motion said.
- Contact Kevin Edwards at 662-581-7233 or kedwards@gwcommonwealth.com.
