UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF FLORIDA
BROWARD DIVISION

IN RE:

FINANCIAL FEDERATED TITLE & TRUST, INC. a/ka ASSET SECURITY CORP. a/k/a VIATICAL ASSET RECOVERY CORP., a/k/a QUAD-B-LTD., a/k/a AMERICAN BENEFITS SERVICES, INC.

Debtor.

__________________________________/

Case No. 99-26616-BKC-RBR
Substantively Consolidated

CHAPTER 11



MOTION TO COMPROMISE AND SETTLE CONTROVERSY WITH
JOSEPH P. FONTANA AND TODD E. LINDEN APPLIED DATA SERVICES, INC.
AND SUB 1 CORP A/K/A RISK MANAGEMENT SYSTEMS, INC.
A/K/A CARD COMMERCE INTERNATIONAL, INC

John W. Kozyak, ("Kozyak") Chapter 11 Trustee for the estate of Financial Federated Title & Trust, Inc, ("FinFed"), by and through undersigned counsel pursuant to Federal Rule of Bankruptcy Procedure 9019 and Local Rule 9013-1(D) files this Motion to Compromise and Settle Controversy with Defendants, Joseph P. Fontana, Todd E. Linden, Applied Data Services, Inc and Sub 1 Corp a/k/a Risk Management Systems, Inc. a/k/a Card Commerce International, Inc and respectfully requests the entry of an Order approving the settlement agreement by and between Kozyak and the defendants in that certain adversary proceeding styled John W. Kozyak v. Joseph P. Fontana, Todd E. Linden, Applied Data Services, Inc and Sub 1 Corp a/k/a Risk Management Systems, Inc. a/k/a Card Commerce International, Inc. adversary case number 00-2285-BKC-RBR-A and as grounds in support thereof states as follows:

1. FinFed's case was commenced by the filing of an involuntary petition for relief under Chapter 11 on October 7, 1999.

2. John W. Kozyak was appointed as the Chapter 11 Trustee. An Order for Relief was subsequently entered on or about November 16, 1999.

3. In connection with Kozyak's investigation of the assets and affairs of FinFed Kozyak determined that substantial transfers had been made by the Debtor to Zane Balsam ("Balsam") and various related persons and entities ( collectively the "Balsam Group") in the approximate amount of $14 million.

4. Kozyak entered into a settlement with Balsam which provides, inter alia, for an assignment to Kozyak of all of the claims which Balsam held against Joseph Fontana, Todd E. Linden and their related corporations (the F & L Claims).

5. The F&L Claims arise out of the transfers by Balsam and other members of the Balsam Group to Fontana, Linden, and their related corporations of funds that Balsam and the Balsam Group received from FinFed.

6. The total amount transferred by Balsam and the Balsam Group to Joseph Fontana, Todd Linden and their related corporations totals $2,810,000.00. Of that amount, Fontana and Linden dispute $400,000.00 based on the notion that one of their corporations entered into a contract with a corporation that is a member of the Balsam Group and that the Balsam Group member defaulted with respect to its obligations under such contract.

7. The Trustee has agreed with Joseph Fontana, Todd Linden and CardCom International f/k/a Sub 1 Corp. f/k/a Risk Management Systems, Inc. to settle the F&L Claims for the amount of $2,610,000.00 payable $150,000.00 within thirty (30) days and thereafter at $10,000.00 per month with the monthly payments increasing by $10,000.00 per month commencing sixty (60) days after execution of the agreement until such time as monthly payments reach the rate of $100,000.00 per month such that a payment of $10,000.00 would be made in sixty (60) days, $20,000.00 in ninety (90) days, $30,000.00 in one hundred and twenty (120) days until the $100,000.00 per month rate of payment is reached. The initial payment pf $150,000.00 is due December 4, 2000 but will be held by counsel for Fontana and Linden if on final order has been entered approving this settlement.

8. The Settlement Agreement, a copy of which is attached hereto as Exhibit "1" further provides for the Trustee to receive a lien on all of the assets of CardCom International and contains certain other representations by Fontana and Linden as well as limitations on Fontana and Linden's treatment of CardCom International.

9. In the event of a default, paragraphs 5 and 6 of the Settlement Agreement govern the rights of the Trustee and among other thing provide for the Trustee to obtain a judgment in full against Joseph Fontana, Todd Linden and CardCom International for $2,810,000.00 plus interest from the date or dates on which the funds were initially transferred less any payments which have been received by the Trustee pursuant to the terms of the Settlement Agreement. The judgment would be entered against CardCom International, Fontana and Linden jointly and severally.

10. The Trustee, in recommending this settlement, has taken into account, (1) the likelihood of success with respect to the claims currently asserted in his Amended Complaint; (2) the maximum upside which he may hope to achieve through further litigation; and, (3) the ability of the Defendants to respond to a money judgment entered against them. The Trustee believes that while there is a considerable amount of risk regarding the Defendants ability to successfully complete their obligations under the Settlement Agreement the benefit of not expending any further litigation costs coupled with the remedies available to the Trustee and there equivalence to remedies that would be available if the Trustee continued this litigation strongly favor settling this case at this time on the terms set forth in the Settlement Agreement.

11. The Trustee believes that the proposed settlement is clearly within the range of possibilities with respect to the outcome of this case.

12. The Trustee recommends that the settlement as embodied in the attached Settlement Agreement be approved by the Court.

WHEREFORE, the Trustee John W. Kozyak, respectfully requests the entry of an Order granting the relief as prayed for above.

I hereby certify that I am admitted to the Bar of the United States District Court for the Southern District of Florida and I am in compliance with the additional qualifications to practice in this Court set forth in Local Rule 2090-1(A).

Rice & Robinson, P.A.
Attorneys for John W. Kozyak, Trustee
848 Brickell Avenue, Suite 1100
Miami, Florida 33131-2943
Telephone: (305) 379-3121
Facsimile: (305) 379-4119


By: /s/

ARTHUR HALSEY RICE
Florida Bar No.: 224723

CERTIFICATE OF SERVICE

I hereby certify that a true and correct of the Motion to Compromise And Settle Controversy With Joseph P. Fontana And Todd E. Linden Applied Data Services, Inc. and Sub 1 Corp A/k/a Risk Management Systems, Inc. A/k/a Card Commerce International, Inc was served via U.S. Mail, postage prepaid, upon all parties set forth on the attached service list this _______ day of November, 2000.


/s/
ARTHUR HALSEY RICE

 

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