Recomm similar to Royal Links or NorVergence?
Leasing News Emeritus Advisor Charlie Lester sent us this e-mail:
“The golf carts sound like Recomm all over again. $125,000,000 in losses when Recomm ran out of money to reimburse the lessees for the monthly lease payments. History does repeat its self and funders never learn. The owners took what money that was left (rumored to be over $25,000,000) and took off to Canada where they cannot be touched by US authorities.”
((This action evidently happened before Leasing News started this publication and involved 12,000 leases with over 30 leasing companies, including Colonial Pacific Leasing, Lease Partners, Bell Atlantic TriCon, Finova, GreatAmerica Leasing, Textron, among others.
It sure sounds like Royal Links, and also may involve NorVergence type leases, too.
From this document http://leasingnews.org/PDF/Optical_Tech.pdf
“This case involves a scheme to use electronic billboards and kiosk (collectively “kiosks”) for advertising. The promoters of the scheme executed it in the following way. First, they organized Optical Technologies, Inc., and a group of affiliated companies, Recomm
International Display Corp. Recomm Operations, Inc, and Recomm Enterprises, Inc (hereafter referred to collectively with Optical Technologies, Inc., as “Recomm”). Recomm, in turn, convinced several advertising agencies of the merits of advertising via kiosks, and convinced pharmacists, veterinarians, optometrists, and others of the profits they would earn by locating the kiosks at their places of business. Having accomplished this, Recomm acquired the necessary kiosks, leased them to the pharmacists and others (the “Lessees”), assigned the leases to finance companies (the “Lessors”), and (4) entered into advertising contracts with the Lessees. These contracts provided that the Lessees would receive a stated percentage of fees Recomm received form the advertising agencies. Recomm, the Lessees, and the Lessors contemplated that the Lessees share of the advertising fees would more than cover the Lessees' lease payments.
“The scheme worked for the benefit of all parties for a few years, until mid-1995, when Recomm began to experience cash-flow problems and ceased remitting to the Lessees their portions of the advertising fees. The lessees responded in two ways. First, they quit paying the Lessors the rent due on the kiosk leases; then they sued Recomm. As the law suits multiplied, Recomm turned to the bankruptcy court for relief. In January, 1996, Recomm filed a Chapter 11 petition in the Bankruptcy Court for the Middle District of Florida.”
The story best continues in: http://leasingnews.org/PDF/LEAN_NorVergence.pdf
Lease Enforcement Analysis News, Summer, 2005, Published by Lease Enforcement Attorney Network—LEAN, titled “NorVergence Related Litigation Paces Standard Lease Enforcement Terms in Jeopardy” by Bryon L. Saintsing and Thomas Grey.
“At the same time the lessees entered into the lease with the finance companies (“lessors”), the lessees entered into advertising agreements and rebate agreements with Recomm whereby Recomm agreed to pay license fees to the lessees for the right to place advertisements on the leased equipment. The lessors were not parties to the advertising agreements between Recomm and its customers. Recomm failed to pay the lessees the license fees and rebates and many lessees in turn ceased making payments on their leases to the leasing companies.
“In Recomm's bankruptcy the lessees of the Recomm equipment were considered unsecured creditors. Recomm, the Unsecured Creditors Committee, and certain leasing companies filed a plan of reorganization and the Court entered an Order confirming the plan. Among other things, the Bankruptcy Court's Confirmation Order modified the terms of the leases (“modified leases”), declared that the modified leases are valid and binding on the lessees, and released lessors and lesses from various potential claims and defenses against each other form the up through the date of confirmation of the plan. In the aftermath of the confirmed plan, numerous leasing companies have had to resort to filing state court civil actions to enforce the terms of the plan and collect the lease payments provided for under the terms of the confirmed plan.”
(Various court documents show "Prior to 1994, Raymond Manklow ("Manklow") and Jean-Francois Vincens ("Vincens") were the sole shareholders..." Records show they "escaped" all claims, and whereabouts are unknown at this time. Editor))