Forced Out: Former CEO Says Hunt Snatched Firm's Reins

by Mark Friedman  on Monday, Feb. 27, 2012 12:00 am  

The way Tom Muccio sees it, Johnelle Hunt orchestrated a massive conspiracy in 2008 to remove him as CEO and then gain control of the biotech company they shared ownership interest in.

Hunt denies the accusation, saying she didn’t want to own BioBased Technologies LLC of Fayetteville, a company her late husband, trucking magnate J.B. Hunt, helped form. Hunt stepped up and rescued the company from the Chapter 11 bankruptcy reorganization it filed in 2009. And now the company is blossoming, Muccio says in court filings.

Whether she wanted to or not, Hunt took control of BioBased and bought out Muccio at “well below market value” of his stock in the company in which he had invested more than $1.2 million, or so Muccio claims in court filings.

Muccio, a former executive at Procter & Gamble who oversaw the global Wal-Mart account, and Hunt have been fighting about BioBased since 2008, including disputes over the management of the company and its value. Muccio and his son, Mike, who was the chief operating officer, rekindled the battle last month by filing a lawsuit in Pulaski County Circuit Court accusing Hunt and others of conspiracy, fraud and violating the Arkansas Deceptive Trade Practices Act. The Muccios are seeking an unspecified amount of money for the loss of the value of their stock in BioBased.

Hunt, through a spokesperson, declined to comment on the case. But Arkansas Business reviewed more than 500 pages of bankruptcy and circuit court documents that provide a cautionary tale of what happens when even well-meaning investors can’t agree on how to manage a company.

So far, the legal victories have been going to Hunt. Muccio wanted a trustee appointed to run BioBased while it was in bankruptcy, and he complained that he was removed as CEO at the end of 2008 as part of Hunt’s conspiracy. But U.S. Bankruptcy Judge Ben Barry of Fayetteville denied the request for a trustee in December 2009.

“I believed Ms. Hunt when she said she really doesn’t want to be here and she doesn’t want this company. And what she’s trying to do is come up with a plan that mitigates her losses,” Barry said, according to the December 2009 transcript of a hearing in the bankruptcy case. “I believe Ms. Hunt’s sincerity in everything she said. And as far as that goes, same goes with Mr. Muccio. I don’t believe there are any bad guys here.”

Barry said Muccio’s allegations of wrongdoing should be handled in state court rather than in bankruptcy court. The Muccios then sued Hunt and others involved in the company in Washington County Circuit Court in 2010, but Circuit Judge Mark Lindsay ruled in 2011 that the allegations should have been handled in bankruptcy court.

The Muccios voluntarily withdrew the lawsuit and repackaged the allegations in the new Pulaski County case. Hunt and the other defendants hadn’t filed a response in the case as of late last week.

Company Beginnings

After nearly 35 years at Procter & Gamble, Tom Muccio retired in December 2003 as its president of global customer teams. Muccio helped grow P&G’s sales to Wal-Mart Stores Inc. from $350 million in 1987 to about $9 billion when he left.

According to his testimony at a bankruptcy hearing in December 2009, Muccio was involved in a real estate investment with Phil Phillips of Springdale and J.B. Hunt, who retired in 2004 from the giant trucking company he founded, J.B. Hunt Transport Services Inc. of Lowell.

 

 

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