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JG

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Reply with quote  #91 
Quote:
Originally Posted by shannon
1) Has the court weighed in on anything yet?  I understand that BD's lawyers are filing petitions saying how they interpret the Terms of Service, but does the court agree?

2) I was always somewhat hopeful that the CEO was an honest person in over his head.  With his interpretation of the TOS, it is almost impossible to see how he didn't know this house of cards would eventually come crashing down.  To continue operating a business in this way seems criminal.  Do you agree?

3) Why would the court possibly allow a business operating in this fashion to continue operating?  No customers will do business with a company that spent all of their customers money and metal on operating costs.  Has the court accepted the Chapter 11 filing yet?

4) What will the company have left if they are forced to sell off their intellectual property?  Again, it seems hard to believe the company can continue to operate.

5) Hiring the people they have requested to hire just seems like it will bleed away whatever assets the company has left.  Why would the court allow this?


[First, another reminder -- I am not a lawyer, this is not intended to be legal advice]

[1] No. There have not been any hearings yet; the first one will be on August 3 at 1:30PM (to discuss the motions Bullion Direct has made so far). AFAIK, the bankruptcy court is not responsible for weighing in on the Terms of Service -- that seems more like an issue for the government agencies that are investigating.

[2] It's becoming less and less easy to believe that this was an "in over his head" type of situation (which I believe was the case at Tulving). It looks like Mr. McAllister chose to use metal stored for customers to finance his business, which even if it could be paid back 100% could easily cause bankruptcy (unless hedged).

[3] It does not sound like Dan Bensimon has plans to continue running the business as it was, just to sell off and/or license the intellectual property. I believe the court would not dismiss the bankruptcy even if fraud was involved, if continuing the business looks like it might bring more money to the creditors than liquidating in Chapter 7.

[4] I believe once the intellectual property is sold off, the bankruptcy will wrap up. Just please do not take that simple sentence as meaning it will be quick.

[5] Without hiring people, the assets cannot be sold. They need someone familiar with bankruptcies (e.g. to have an idea of what paperwork needs to be filed, who notices need to go to, etc.), that can also run the business. Those people do not come cheap. I have no idea if the fees are fair or not. All that said, if creditors feel that the fees are too high, they can file an objection with the court.

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tboll

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Reply with quote  #92 
Based on GWest posting on ownership, I'm starting to wonder if any business that holds Assets for others, whether it's cash (banks), stocks (brokerages), or PM (BD), doesn't see all this stored money as an opportunity to make additional profits on the side.  Heck, isn't that the American way?  Here this guy has $25M worth of PM (actually, it was probably closer to $40M when PM prices were near their prime) and as he saw the PM market crashing he thought, "Hey, what am I doing paying someone to store all this wealth I'm holding when I can just put it to work now and pay it back later.  And if the PM prices keep plummeting, I will only have to pay back half the money.  I don't even have to worry about making interests/profit on the money."  (I guess that's essentially Shorting the whole kit and caboodle but forgetting that he still has keep some funds to pay back the owners.)

So many businesses are houses of cards (or just appearances).  They rely 100% on more money coming in than is going out.  Banks can't tolerate a withdraw panic, brokerage companies can't either.  I'm not making any excuses for Charles, I'm just saying that what he did is probably practices across a lot more businesses than we know that hold assets and rely on positive inflow of investments. I guess we have to realize that we take a [big?] risk when we store anything (have an account and/or portfolio) with the same vendor who sells the product (or claims to sell it) that makes up your portfolio.
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Lars

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Reply with quote  #93 
Quote:
Originally Posted by tboll
Based on GWest posting on ownership, I'm starting to wonder if any business that holds Assets for others, whether it's cash (banks), stocks (brokerages), or PM (BD), doesn't see all this stored money as an opportunity to make additional profits on the side.  Heck, isn't that the American way?  Here this guy has $25M worth of PM (actually, it was probably closer to $40M when PM prices were near their prime) and as he saw the PM market crashing he thought, "Hey, what am I doing paying someone to store all this wealth I'm holding when I can just put it to work now and pay it back later.  And if the PM prices keep plummeting, I will only have to pay back half the money.  I don't even have to worry about making interests/profit on the money."  (I guess that's essentially Shorting the whole kit and caboodle but forgetting that he still has keep some funds to pay back the owners.)

So many businesses are houses of cards (or just appearances).  They rely 100% on more money coming in than is going out.  Banks can't tolerate a withdraw panic, brokerage companies can't either.  I'm not making any excuses for Charles, I'm just saying that what he did is probably practices across a lot more businesses than we know that hold assets and rely on positive inflow of investments. I guess we have to realize that we take a [big?] risk when we store anything (have an account and/or portfolio) with the same vendor who sells the product (or claims to sell it) that makes up your portfolio.

Exactly.  Anyone who's read The Creature From Jekyll Island will recognize this.  It's been done throughout history and evolved into what's known as "Fractional Reserve Banking."  The people charged with safeguarding assets look at those big piles of metal, money, etc., and say, "Gee, all this gold/money just sitting here doing nothing - I'll just use some of it to make more money, keep enough to pay off anyone who demands their assets, and replace it all later.  Nobody will be the wiser."

It's too late for me and my wife.  We bought into that crap all the investment gurus were spouting back when personal investing started booming, and funded IRAs.  Heavily.  Then I started realizing I didn't like having the government telling me when and how I can use my own money, and we stopped funding our IRAs about nine years ago.  And when custodians KNOW their clients likely won't demand their IRA assets before they're 59 1/2, it's too easy for them to "put to good use" funds that are "just sitting around."  The only type of retirement plan I'd recommend to anybody is a 401k or similar, and only as much as your employer will match.  Other than that, put it where you can get it all back.  And anymore, that hole in the back yard with three big dogs is looking really good...
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BD BOINKED

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Reply with quote  #94 
Quote:
Originally Posted by momo
With all being said and our buillions are not existing anymore, what is the practical next step that we should do? Shall we go ahead and submit our claims and if so, any assistance where to obtain the forms and how to be submitted?
From prior discussion, it was mentioned that this could be done personally or through a lawyer? May be the preference is through a lawyer ideally, but what will be the objective drawback if applied personally?
Inputs highly appreciative



My advice to you is to take a look at the Proof of Claim form, here is one that is easy to use:

https://www.kccllc.net/documents/pocs/04-10%20b10%20form.pdf

It is pretty simple, be sure to read the instructions and definitions and you should be fine. If you are uncomfortable at all consult a lawyer. I understand there is a way to file online but this is my preference and also gives you at least an idea what is involved even if you choose not to file at this time.
I filled mine out and printed it, I have not yet sent it in. Many people are recommending not to at this time, but I am still struggling with the logic of delaying. Other than a couple of examples of improperly filled out forms and it becoming public record, what's the downside? If your name is on the creditors list already, then no harm done. If not, it is now. Make you own decision based on what you think is best for you.

When I look at the list of the top 20 creditors, which amount to over $4m dollars alone, and the 5000+ other list, which I am not on either, I realize I'm just a nat on this ugly donkeys behind. With only under $700k of inventory to show, I'm not sure what good any of this will do anyway.

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nobody

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Reply with quote  #95 
The downside is that a manual claim (that will otherwise be indicated on the schedules) wastes billable hours to the estates attorneys, meaning any eventual resolution will be reduced by the time it takes to reconcile automatically determined claims (which will be on the schedule) against claim forms.

I have a relatively high degree of confidence at least the majority of us will show on the schedules for our full account value - if you don't, when they come out in august, then file your PoC before the deadline in november.


The general "don't file now", is because it will maximize the value to everyone if the lawyers aren't deducting dollars to deal with claim forms that were also dealt with by the database reconcilliation.  It's not to deny you access to your claim, it's to maximize the residual value of the estate until you're certain the estate is not recognizing your claim properly.

At the moment, nobody can be certain of that, so the [not legal advice] suggestion has been to wait until they've filed all the schedules.

You are of course free to pursue any course action on your own behalf you feel is appropriate - and I hate sitting on my hands too - but right now it's the way to best preserve value left in BD to be distributed to creditors.
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areabird

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Reply with quote  #96 
Quote:
Originally Posted by LoneStarHog
Quote:
Originally Posted by tboll
I might be wrong on these numbers but didn't I read that the vault content was about $650K while the company cash was $160K (total of $800K cash/metal) while customers accounts equaled something more like $20M or even more?  So it would seem that the only other asset is the company's software.  Are we to believe that it's value just happen to be $19M or did they just use the formula?

Total Debt - Total physical assets = Value of the IP

and thus they are still solvent and able to recover from chapter 11 bankruptcy?


Chapter 11 is really a restructuring.  However, it does not mean that creditors do not take losses.  It merely means that the company is still viable with concessions from its creditors.  Sometimes, those concessions might include changes to original agreements which allows the Chapter 11 company to continue in operation with future payouts.

It does not sound like Bullion Direct will remain in Chapter 11, but possibly go into Chapter 7.

This is such a fast-moving target with so many unknowns that all one can say is, "I dunno..."




Chapter 11's are generally a restructuring, but there are plenty of examples where a company proposes a plan of liquidation rather than convert to a Chapter 7. That's definitely a possibility here.
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areabird

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Reply with quote  #97 
Originally Posted by shannon:
1) Has the court weighed in on anything yet? I understand that BD's lawyers are filing petitions saying how they interpret the Terms of Service, but does the court agree?

Reply by JG:
AFAIK, the bankruptcy court is not responsible for weighing in on the Terms of Service -- that seems more like an issue for the government agencies that are investigating.

-- I disagree. Interpreting the Terms of Service is likely to be an issue that is litigated before and decided by the judge because it directly concerns whether/what portion of the "metal on hand" is either property of the bankruptcy estate or allocated property of one or more customers. The company is presumably going to argue that 100% of the metal is property of the estate and subject to use to fund the expenses of bankruptcy and, if anything is left, be ratably distributed to creditors. What anyone who has metal on deposit with BD needs to do is start gathering their documentation to try to establish, both factually and legally, that some portion of the metal is their allocated/separate property.
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ChevyRacer

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Reply with quote  #98 
Quote:
Originally Posted by areabird
I disagree. Interpreting the Terms of Service is likely to be an issue that is litigated before and decided by the judge because it directly concerns whether/what portion of the "metal on hand" is either property of the bankruptcy estate or allocated property of one or more customers.


Well, my concern is the not the metal on hand, but rather the metal NOT on hand. If Charles doesn't have at least enough bullion to back up every single paid entry in his customers' online accounts, then Charles has STOLEN the money and/or bullion of those customers. And since we know full well that he doesn't have that much bullion, the verdict is in: GUILTY. Let the Texas or Federal departments of corrections take it from here. In the meantime, law enforcement and/or the courts should start going after his personal assets, not for his role as a corporate officer--because, of course, that's what corporate bankruptcy is designed to prevent--but for his role as a SCAM ARTIST and a FELON.
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JG

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Reply with quote  #99 
Quote:
Originally Posted by areabird
I disagree. Interpreting the Terms of Service is likely to be an issue that is litigated before and decided by the judge because it directly concerns whether/what portion of the "metal on hand" is either property of the bankruptcy estate or allocated property of one or more customers. The company is presumably going to argue that 100% of the metal is property of the estate and subject to use to fund the expenses of bankruptcy and, if anything is left, be ratably distributed to creditors. What anyone who has metal on deposit with BD needs to do is start gathering their documentation to try to establish, both factually and legally, that some portion of the metal is their allocated/separate property.


Excellent point, thank you.

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tboll

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Reply with quote  #100 
It would be a quite a twist if what little metal BD has is ruled as property of IRA holders and the estate lawyers have absolutely nothing but the $160K cash on hand and reputed Intellectual Property.

PS:  Oh shoot, I forgot about the $500,000 of uncashed checks that they are in the process of depositing.  I guess the Reorganizers and bankruptcy lawyers will have funding for awhile afterall.

PPS:  Now I'm beginning to wonder if CM didn't deliberately NOT buy metal for customers so that in the event of a bankruptcy the customer could not argue that they  have allocated metal, since there never was metal purchased to allocate.
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bdhasmysilver

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Reply with quote  #101 

I strongly suspect CM has been looting the vault for years.  Was there any metal actually moved to Delaware?  I seriously doubt it at this point.  This “move” was nothing more than a cover-up to keep the Ponzi scheme going as long as possible, so CM could continue collecting checks and metal from unsuspecting customers.  This POS belong in prison, or better yet, living out of a Ford Pinto (recall they explode when hit from the rear) in the most blighted urban area in the country eating Kibbles and Bits.

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