GreenTech Automotive files bankruptcy case, cites damaged reputation

By Caroline Salls

Pittsburgh, Feb. 28 – GreenTech Automotive, Inc. filed Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the Eastern District of Virginia.

GreenTech internal legal counsel Norman D. Chirite said in a statement filed with the court that “the debtors’ businesses have reached the point of unsustainability absent utilization of the tools presented by Chapter 11.”

“GreenTech has experienced significant adverse developments that have hindered the successful operations of its automobile business, impaired its access to capital and resulted in difficulties in the advancement of its investors’ permanent residency petitions before the United States government,” Chirite said.

Web reports

Specifically, Chirite said the Franklin Center for Government and Public Integrity, through its watchdog.org website, “published a series of 76 negative articles containing certain false and defamatory statements targeting GreenTech,” in 2013 in connection with its previous affiliation with then Virginia gubernatorial candidate Terrence McAuliffe.

Although the company’s defamation claims against Franklin Center in Mississippi and Virginia were ultimately resolved, Chirite said “the adverse publicity occasioned by the watchdog.org articles and extensive follow-on coverage in major media had extremely negative impacts on the governmental, investor and public perception of GreenTech and its business.”

Chirite said the Securities Exchange Commission launched an investigation of GreenTech stemming from the adverse publicity, although the SEC ultimately declined to pursue any further action against the company.

In addition, Chirite said the Office of the Inspector General of the Department of Homeland Security conducted an investigation of GreenTech and the involvement of McAuliffe in communications with the department’s Citizenship and Immigration Services.

Both investigations further damaged GreenTech’s reputation, according to Chirite.

Plastech lawsuit

Chirite said “GreenTech was dealt another severe blow” when it was sued in early 2015 by Plastech Holdings Co., which “falsely accused GreenTech of tortious interference with PHC’s contractual relationship with a Chinese automotive manufacturer.”

The Plastech lawsuit was dismissed, but Chirite said GreenTech incurred significant legal and other expenses and was forced to abruptly terminate its business relationship with the Chinese company, forfeiting a substantial deposit, stranding substantial start-up expenses and resulting in other damages totaling in tens of millions of dollars, “which effectively destroyed GreenTech as a viable enterprise.”

Chirite said GreenTech has filed civil claims against Plastech and its counsel for the damage resulting from the filing of claims “which they knew were fraudulent.”

Bankruptcy plans

Chirite said GreenTech decided a Chapter 11 filing at this time is the best alternative in order to stabilize its businesses, provide access potentially to debtor-in-possession financing and ensure that maximum value can be preserved and realized for the benefit of their estates.

“The debtors believe that, by using the tools available to them under the Bankruptcy Code, they can effectuate a value-maximizing transaction through a plan of reorganization or sales,” Chirite said.

Debt details

According to court documents, GreenTech has $100 million to $500 million in both assets and debt.

The company’s largest unsecured creditors are GreenTech Automotive Partnership A-3 LP of Sterling, Va., with a $42.41 million investment claim; Capital Wealth Holding Ltd., with an $18.85 million promissory notes claim; Elliot P. Fitzgerald of Richmond, Va., with a $7.57 million judgment creditors claim; the State of Mississippi, with a $2.85 million loan claim; Tunica County, Miss., with a $2 million automotive manufacturing facility claim; and American Theme Park Funds Management LLC of Sterling, Va., with a $1.15 million promissory notes claim.

Hirschler Fleischer is representing GreenTech in the Chapter 11 case.

GreenTech is a Sterling, Va.-based electric vehicle manufacturer. The Chapter 11 case number is 18-10651.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.