Uncooking the Books at Affiliated Eats Into Assets Available for Creditors

by Mark Friedman  on Thursday, Apr. 5, 2012 11:34 am  

On Feb. 27, 2009, U.S. Bank discovered that Affiliated was overdrawn by more than $11 million and declined to honor more credit requests.

In early March 2009, in the first public sign of trouble, Mills was removed as CEO. The company filed for bankruptcy on May 5, 2009, and stopped operating on July 19, 2009.

Unraveling the cooked books at Affiliated was a massive project, Lain Faulkner said in its Oct. 31 filing.

Thomas said last week that his firm wasn’t hired “to investigate or uncover a story or to see what was wrong or right or who may have done something wrong.”

He said the accountants’ main job was to find the vendors that Affiliated paid just before filing for bankruptcy.

Lain Faulkner told the bankruptcy court that Affiliated’s financial information and filing systems were “stored in a haphazard and unorganized manner.”

A number of key documents couldn’t be found, and accountants had to get them from other sources.

About 600 boxes of documents were shipped to Lain Faulkner’s Dallas office, where the paperwork was then inventoried, labeled and indexed.

For its work on the case from March 2010 through September, Lain Faulkner sought $769,000 for 3,195 hours of work. It didn’t charge for 121 hours, foregoing fees of $32,271.

On Jan. 30, U.S. District Court Judge Richard Taylor approved the request for payment.

 

 

Please read our comments policy before commenting.