The Langhorne Company

Various Projects

The International Bank of Miami, N.A.

This assignment included design and construction supervision through occupancy of this flagship banking headquarters facility for a billion dollar institution. Relocation Planning, project management, negotiation of professional contracts, completion of architectural drawings, code compliance, engineering, permit ready construction documents, bidding process and selection and hiring of general contractor, and construction supervision through punch list, in connection with the relocation of The International Bank of Miami, N.A. to Alhambra Towers, Coral Gables, Florida.

Click here for a virtual tour of The International Bank of Miami, N.A.

Camp Hill Mall

The Langhorne Company acted as real estate and financial advisor to Camp Hill Mall Shopping Center Associates, owners of Camp Hill Mall on November 17, 2000 The Langhorne Company announced the closing of the acquisition of Camp Hill Mall, a 500,010 square foot regional mall in Camp Hill, Pennsylvania by CIGNA for a purchase price of $29.5 million. The major tenants of the property are Montgomery Ward, Boscovs, Giant Food Store, Barnes & Noble and Zany Brainy.

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Estate of Thomas Warmus
Richard M. Langhorne, Chapter 11 Trustee and Liquidating Trustee
Estate of Thomas A. Warmus, Debtor

Overview | Recovery of Estate Assets | Objections to Claims | Conclusion

Overview

On March 5, 1996, sixteen months after the filing of the Thomas A. Warmus bankruptcy case, Richard M. Langhorne was appointed Chapter 11 Trustee by Order of Bankruptcy Judge Raymond Ray. The Warmus bankruptcy and all of the related litigation were atypical, more akin to a war of attrition in which Mr. Warmus, his wife, their friends, family members and lawyers participated in deception and uncooperativeness. These parties refused to collaborate with the Trustee or his counsel, perpetuating a complex web of lies. Assets continued to be transferred from the Estate post-bankruptcy, through intricate corporate structures, many established before Mr. Warmus' December 2, 1994 filing of a bankruptcy petition. Seldom has there been a case, in the Southern District of Florida, in which the debtor and his agents have been so difficult, the lies so rampant and well organized, and the fraud so perpetual. Examples, throughout the course of the case, include:§ Judge Ray made a criminal referral of Mr. Warmus to the U.S. Attorney's Office for bankruptcy crimes.§ Judge Ray made numerous findings of fact in Orders regarding Mr. Warmus', his friends', family members' and attorneys' failures to cooperate with the Trustee, their dishonesty, and engagement in improper litigation tactics. These findings by the Court have included repetitive sanctions against these people, including the attorney representing Mr. Warmus' friends, family, and wife Nancy K. Dailey.§ Despite numerous attempts by Trustee Richard Langhorne and his counsel, neither Mr. Warmus nor Ms. Dailey settled a single claim, demand, or piece of litigation throughout the course of this bankruptcy case. This is true even in a circumstance in which they acknowledged that the proposed settlement would have resulted in a significant benefit to both them and the Estate.§ Mr. Warmus and Ms. Dailey have appealed more than 50 Orders throughout the course of this bankruptcy case. The Trustee's counsel, Greenberg-Traurig, has obtained the dismissal of a number of these appeals on substantive or procedural grounds. A few of the appeals remain pending. None of these appeals has resulted in a reversal, modification. or remand in favor of Mr. Warmus or Ms. Dailey.§ Mr. Warmus and Ms. Dailey repeatedly filed pleadings with the Bankruptcy Court asking that various parties in interest be disqualified from participation in the Warmus case. Mr. Warmus and Ms. Dailey have also requested the referral of miscellaneous people to the United States Attorney's Office, the Florida Bar, the Federal Aviation Administration and even the Federal Communications Commission for "criminal activities." These people include, but are not limited to, Judge Ray, Trustee Richard Langhorne and his family, Trustee James Feltman (of the American Way Service Corporation case) and his counsel, Greenberg Traurig, Mark Bloom, Linda Worton, and James Leshaw.§ Mr. Warmus and Mr. Leshin's discovery tactics have been unrelenting. Despite Mr. Warmus' duty to cooperate with Richard Langhorne, he has refused to cooperate in any way with the Trustee or Greenberg Traurig, has refused to provide Greenberg Traurig or the Trustee with requested documents, and has refused to provide background information on assets, business entities, and transactions. Mr. Warmus and Mr. Leshin even refused to inform us as to names of outside parties who might have knowledge of pertinent information. Mr. Warmus was rarely cooperative in these depositions. Accordingly, the Trustee's counsel was forced to compel the attendance of Mr. Warmus and others at virtually every deposition and defend against multiple motions for protective orders each time the Trustee needed information from Mr. Warmus, his friends and family members. He often claimed he had no memory of any of these transactions or offered unintelligible responses. Mr. Warmus usually moved for a protective order the day before or the day of a deposition, forcing a continuation of the deposition in accordance with Local Bankruptcy Rules, and also forcing the Trustee to file a written response with the Court and attend a hearing on the matter. Based on the labor and persistence of the Trustee and his counsel, more than $9,000,000 in assets were recovered for creditors of Mr. Warmus' Estate, resulting in payment in full of numerous secured and administrative claims and sufficient funds to provide a distribution to general unsecured creditors of an estimated 55 cents on the dollar. This result was accomplished not only through collection of estate assets (mostly the result of highly contentious litigation), but also through successfully eliminating more than $1,100,000 of secured claims (plus the $330,000 secured claim asserted by Nancy Dailey), more than $50,000 of priority claims, and more than $3,700,000 of general unsecured claims (plus the $5,388,000 general unsecured claim asserted by Nancy Dailey) through multiple objections to claims and other litigation. However, these results were accomplished through total aggregate legal fees billed exceeding $2,100,000. Of this amount, almost $800,000 remains uncollected to date, much in the form of accounts receivable, which the Trustee's counsel has been required to carry for more than one year. By way of comparison, at the time of Richard Langhorne's appointment as Trustee and Greenberg Traurig's retention in March 1996, Mr. Warmus had already been in bankruptcy for approximately 15 months, and the counsel for the Creditor's Committee, David Profilet and Stearns Weaver had already incurred well in excess of $300,000 in attorneys' fees. Despite fees in the aggregate amount of more than $300,000, and despite having spent 15 months in Chapter 11, no assets had been brought into the estate. Thus, at the time Richard Langhorne was approved as Trustee, a retainer for counsel was out of the question; indeed, the Trustee had no money even to administer the case. A brief summary of some of the larger pieces of litigation and claim objections, which have resulted in substantial benefit to Mr. Warmus' creditors and the Estate is set forth below. This is intended only as a summary of some of these events and is neither intended to be a summation of the Trustee and his counsel's involvement in the Warmus case nor a complete discussion of the settlement, asset recovery, or litigation successes of the Trustee and Greenberg Traurig.

Recovery of Estate Assets

Nanseekay Life Insurance | Michigan Insurance | Mid-Florida Yogurt | White Lake Township | Eagle's Nest | Winner's Dodge | Vehicle Recovery | Snyderburn Rishoi | Morganroth | Dischargeability | Recovery & Sale

A. The Satisfaction of the Estate's Federal Income Tax Liability At the commencement of our involvement in the Warmus case, the IRS asserted a secured claim against the Estate in the approximate amount of $1,600,000. This claim was secured by a tax lien on substantially all of the Estate's assets, including all real property in Palm Beach and Broward Counties, Florida and Michigan's Antrim, Oakland, and Bellaire Counties. The tax lien had also attached to the Individual Retirement Accounts of Thomas Warmus and his wife, Nancy Kay Dailey. The aggregate values of the IRAs were approximately $1,400,000 at all relevant times. The Trustee initially attempted to persuade the IRS to levy on Mr. Warmus' IRA, which was arguably exempt and, therefore, not available to satisfy the claims of Mr. Warmus' creditors, and his wife's IRA, which was clearly exempt and not available to satisfy any claims of Mr. Warmus' creditors. The IRS informed the Trustee and his counsel that they had never levied on an individual debtor's IRA in the course of a bankruptcy case in the Southern District of Florida. The IRS further informed us that the levying on an individual debtor's IRA would require the written consent of the District Director of the IRS. After much negotiation, including the Trustee's Motion threatening to "marshall" the IRS to the IRA assets and otherwise forcing them to levy on those assets, we prevailed. At the same time the Trustee was seeking to enforce the IRS' levy on Mr. Warmus' exempt IRA, Mr. Warmus, his wife, and their lawyers were threatening to sue the IRS if they proceeded. The IRS subsequently levied on both Mr. Warmus' and his wife's IRAs producing a benefit to Mr. Warmus' creditors and estate of $1,400,000. Had the Trustee and his counsel not been successful in this, the Internal Revenue Service's secured claim would have been paid in full from assets otherwise available to the Warmus Estate and ultimately to creditors. As a side note, Mr. Warmus and his wife unsuccessfully challenged the IRS' levies on the IRAs in two separate appeals, both of which were denied in the Eleventh Circuit. The estimated total fees incurred in connection with this matter were approximately $25,000.
B. Nanseekay Life Insurance Company Settlement Nanseekay Life Insurance Company was put into supervision by the Arizona Insurance Department in June 1993. As had occurred in other jurisdictions, Mr. Warmus either sued or threatened to sue the Arizona Insurance Department and each of its senior officials throughout the course of the supervision. Accordingly, at the time that the Trustee and his counsel got involved with the Arizona Insurance Department, the Department was unwilling and hesitant to work with the Trustee. They also stated their refusal to release funds of Nanseekay without a full release from Mr. Warmus. This release could be obtained only through confirmation of a Plan of Reorganization. Accordingly, after much negotiation with the Arizona Insurance Department and upon confirmation of a Plan of Reorganization containing a full release, the Trustee and his counsel successfully recovered approximately $2,300,000 from the supervisor of Nanseekay for the benefit of the Warmus Estate and unsecured creditors. To this day, both Mr. Warmus and his wife assert that the stock of Nanseekay has always been owned by his wife, and not by Mr. Warmus. This is a contention that the Trustee has been forced to deal with repeatedly throughout litigation in the Bankruptcy Court and in Arizona. The estimated legal fees incurred in connection with this matter were approximately $15,000.
C. The Michigan Insurance Settlement As Trustee, Richard Langhorne was the sole shareholder of American Way Service Corporation (also a bankruptcy debtor) which owned the stock of several Michigan insurance companies including American Way Life Insurance Company and American Way Casualty Corporation, both of which were placed into rehabilitation by the Michigan Insurance Department in April 1993. Like the situation with Nanseekay, Mr. Warmus had harassed, sued, threatened, and otherwise intimidated and upset the Michigan Insurance Department and its lawyers. Mr. Warmus had even taken one piece of litigation in a related matter in Missouri to the United States Supreme Court. Accordingly, although there would arguably be "runoff" money available for distribution to the shareholder of the Michigan insurance companies (i.e., American Way Service Corp.), claims had to be paid and the Michigan Insurance Department expressed a need to retain a significant "litigation reserve" to pay for anticipated litigation with Mr. Warmus and his family. At the time Richard Langhorne as Trustee and his counsel entered the Warmus case, there was no expectation that any of these funds would be paid directly to the Estate, as Mr. Warmus had no direct claims against the insurance companies and the American Way Service Corporation Estate was the sole shareholder of the Michigan insurance companies. The Trustee and his counsel, together with professionals representing the American Way Trustee, were successful in persuading the Michigan Insurance Department that we could provide a release of all claims through the bankruptcy process. The Trustee also negotiated a "payment" to the Warmus estate of $500,000 for this release and other consideration. Without this provision, any runoff funds would have been paid to American Way for the benefit of their creditors before any funds would have been paid to the Warmus Estate. It was only through this mechanism that Mr. Warmus' creditors were able to receive any direct benefit whatsoever from the Michigan insurance companies. The Michigan insurance settlement also involved the "channeling" of all dealer claims against the Michigan insurance companies from Michigan to the American Way Service Corporation Estate. We were, therefore, successful not only in accelerating the distribution of funds from the Michigan insurance companies, but also in eliminating substantial claims of automobile dealers which would have otherwise been resolved in Michigan. The elimination of these claims eliminated the need for the Michigan "litigation reserve," permitted the funds to completely bypass the American Way Service Corporation Estate and directly resulted in a net benefit to Mr. Warmus' creditors of $500,000. As a creditor of the American Way estate, the Warmus Estate also received a portion of the funds paid to American Way through an allowed claim of $700,000. Total legal fees incurred in connection with this matter were approximately $50,000.
D. The Mid-Florida Yogurt Settlement When Richard Langhorne and his counsel entered the Warmus case, Mr. Warmus had already lost an adversary proceeding in the Mid-Florida Yogurt case pending in the Middle District of Florida, Tampa Division, in which Warmus had asserted a constructive trust over certain funds of that debtor. Judge Baynes had already issued a lengthy opinion denying Mr. Warmus' claim of constructive trust over these funds. Judge Baynes had also apparently characterized the constructive trust litigation as "One crook stealing from another crook." When Richard Langhorne and his counsel entered the bankruptcy case, there was a pending objection to Mr. Warmus' general unsecured claim against the Mid-Florida Yogurt Estate. When Greenberg Traurig substituted into the litigation, Judge Baynes explained to us in no uncertain terms that the Trustee was stepping into Mr. Warmus' shoes "with all its warts" and that he would be bound by previous findings of the Court with respect to Mr. Warmus. Despite Mr. Warmus' refusal to provide any information whatsoever about the Mid-Florida Yogurt case, the Trustee successfully negotiated a settlement with the Trustee of Mid-Florida Yogurt in the amount of $50,000 cash, 50% of which was paid to the Warmus Estate and the other 50% to the American Way Estate. Total legal fees incurred in connection with this matter were approximately $8,000.
E. The White Lake Adversary Proceeding On the date of the filing of Mr. Warmus' Bankruptcy Petition, Mr. Warmus and his wife jointly owned approximately 250 acres of undeveloped land in White Lake Township, Michigan. Mr. Warmus subsequently claimed this property as exempt. Judge Ray denied the claim of exemption. Mr. Warmus again claimed the White Lake Property as exempt. Judge Ray again denied the claim of exemption. Notwithstanding Judge Ray's two Orders on the claims of exemption, Mr. Warmus and his wife have continued to assert that the White Lake Property was held as tenancy by the entirety and is, therefore, exempt from the claims of creditors. Mr. Warmus has also asserted that he had granted a one-third interest in the White Lake Property to his son through an option contract. Immediately before the filing of the bankruptcy case, Mr. Warmus had also granted a deed purporting to transfer the entire White Lake property to himself and his wife, as tenants by the entirety. In order to permit the Warmus Estate to obtain an economic benefit from the White Lake Property, the Trustee filed a Complaint which, among other things, sought the avoidance of the last-minute transfer of the White Lake Property, sought the avoidance of the purported one-third interest granted to Mr. Warmus' son, and sought authorization to sell both the Estate's interest and the interest of Ms. Dailey in the White Lake Property pursuant to Section 363(h) of the Bankruptcy Code. Establishing the elements of Section 363(h) is a tremendously high standard particularly with respect to a large tract of vacant land. After a five-day trial that commenced in November 1997 and terminated on April 1998, visiting Bankruptcy Judge Francis Conrad granted all of the relief requested in the Complaint. Accordingly, the Estate is now in a position to sell both its interest and the interest of Ms. Dailey in the White Lake Property. The White Lake Property was sold for its appraised value of more than $1 Million. The spouse's share, Nancy Kay Dailey's, was subjected to liens and judgments obtained in other litigation including breach of fiduciary duty. The Trustee provided a net benefit to the Warmus Estate and its creditors of approximately $500,000 and several hundred thousand dollars to the American Way Estate through funds made available to satisfy American Way's judgments. Total combined legal fees incurred in connection with this matter and the Eagle's Nest adversaries proceeding (which were consolidated for trial purposes) were approximately $235,000.
F. The Eagle's Nest Adversary Proceeding In the month before filing his bankruptcy case, by corrective deed, Mr. Warmus transferred a vacation home covering three separate lots in Bellaire, Michigan from himself to himself and his wife, as tenants by the entirety. Mr. Warmus then proceeded to claim this property as exempt from the claims of creditors. The Trustee filed a Complaint that sought to avoid these transfers as fraudulent conveyances. In the alternative, the Trustee sought an Order authorizing the sale of both the Estate's interest and the purported interest of Ms. Dailey in the Eagle's Nest property pursuant to Section 363(h) of the Bankruptcy Code. Approximately one week after the Trustee served the Complaint, Ms. Dailey granted a mortgage on the Eagle's Nest Property to Mr. Warmus' son. This mortgage was recorded with the Registrar of Deeds, thereby requiring the Trustee to amend the Complaint seeking the avoidance of the mortgage. After a five-day trial on this matter, on April 7, 1998, Judge Francis Conrad ruled that the three Eagle's Nest lots had been fraudulently transferred by Mr. Warmus. Avoiding the transfers of the three lots, the Court found that the Trustee had proven Mr. Warmus engaged in fraud, had successfully established that Mr. Warmus was insolvent as of the date of the fraudulent transfers and had successfully proven that the Mortgage on the Eagle's Nest lots granted post-petition to Mr. Warmus' son was invalid under applicable state and federal law. The Court authorized the Trustee to sell the Eagle's Nest lots. Accordingly, the work of the Trustee and Greenberg Traurig on the Eagle's Nest adversary proceeding represents a potential benefit to the Estate of approximately $200,000. Total combined legal fees incurred in connection with this matter and the White Lake adversary proceeding (which were consolidated for trial purposes) were approximately $235,000.
G. The Winners Dodge / Lowe Adversary Proceeding The Lowe Adversary Proceeding was perhaps the most contentious of all pieces of litigation in the course of the Warmus bankruptcy case. As a result of the Lowe adversary proceeding and related proceedings in the main case, the Trustee expects a potential recovery to the Liquidating Trust of between $500,000 to $702,000. In October of 1997, the Trustee negotiated a settlement agreement with Gary and Kathleen Lowe, which provides for the Lowes to make full cash payment of $550,000 immediately upon approval of the settlement agreement, in satisfaction of all claims held against them by the estate. The settlement payment will satisfy certain obligations owed by the Lowes relating to Winners Dodge in Wood Haven, Michigan which the Trustee has asserted belong to the Liquidating Trust, including (1) a "Down Payment Note" with an outstanding principal balance of approximately $136,000, (2) a "Back Rent Obligation" with an outstanding principal balance of approximately $389,000, and (3) "Note No. 180-1" in the original principal amount of $50,000. The Lowes are satisfying the Down Payment Note and Back Rent Obligation at a discount, because these obligations have lengthy amortization schedules (16 years for the Down Payment Note, and approximately 7 years for the Back Rent Obligation). Final approval of the settlement agreement is contingent upon the Bankruptcy Court entering orders clarifying that the Trustee is the owner of these obligations. The Bankruptcy Court has already entered one such order, the Final Judgment in the Lowe Adversary (which was affirmed on appeal in the district court), in which the Court concluded that the Trustee had the right to collect all future payments on the Down Payment Note ($136,000). The only portion of the settlement remaining is the hearing on Note No. 180-1, was resolved. As the hearing on Note No. 180-1 was promptly scheduled, the Trustee finalized the settlement upon payment by the Lowes of $500,000 in satisfaction of the Down Payment Note and Back Rent Obligation. The settlement agreement is important to the Liquidating Trust because the Lowes would otherwise be able to satisfy those unsecured obligations through normal payments of approximately $5,200 a month over the next 16 years (dropping to approximately $1,200 a month after 7 years). In addition to the recovery of $500,000 to $550,000 from the Lowes, the Trustee has obtained a judgment for an additional recovery of $152,000 as a result of the Court's resolution of the order to be entered by the Court on the Trustee's Motion to Compel the Debtor to Turnover Past and Future Payments on Back Rent Obligation. Accordingly, the Trustee and Greenberg Traurig's work on the Lowe Adversary and related proceedings in the main case represent a potential benefit to the Estate of $500,000 to $702,000. Sadly, the total legal fees incurred in connection with this matter were approximately $433,000.
H. Vehicle Recovery Adversary Proceeding The Vehicle Litigation was filed as an attempt to recover multiple vehicles, including very valuable "collector cars," boats, and an airplane which Mr. Warmus claimed that neither he nor his companies owned. The Vehicle Litigation was commenced when Richard Langhorne, together with the American Way Trustee, learned through a confidential source of the existence of certain cars and a boat. The Trustee immediately sought and obtained an emergency temporary restraining order enjoining Mr. Warmus and others from transferring, moving or concealing any of the subject vehicles. After prosecuting numerous motions to compel the appearance of Warmus' friends and family members for deposition, defending against corresponding motions for protective orders and finally conducting discovery, it became clear that this would not be easy litigation. Among other things, Mr. Warmus had "sold" a number of collector cars valued at more than $400,000 to an automobile dealer in California named Gary Dee in exchange for a payment of $86,000. The sale was evidenced by a check that was actually negotiated as well as a Purchase Agreement. Mr. Dee was not one of Mr. Warmus' regular accomplices. There had also been a "sale" of a yacht to Bill Cheek and a "gift" of an airplane to Mr. Warmus' son many years before the filing of the bankruptcy case. After a lengthy evidentiary trial before visiting Bankruptcy Judge Gregg, the Trustee successfully proved that Mr. Warmus was the real owner of each of these assets, that the sales transactions were shams and that these assets should be available to satisfy the claims of creditors of the creditors of the Warmus and American Way. Judge Gregg ruled on this issue on January 21, 1999. The ninety-eight-page ruling by Judge Greg extended judgment in favor of both Trustees against Thomas Warmus, Thomas Alan Warmus, Gary Deem Moreno Balley Pontiac Buick GMC Truck, William Cheek, Touchdown Development Corporation, Mae Muir, Kathleen Lowe and David Howard granting $704,924.20 plus interest. Total Greenberg Traurig fees incurred in connection with this matter are approximately $48,000.
I. Snyderburn, Rishoi Adversary Proceeding As a result of the Snyderburn, Rishoi adversary proceeding, the Trustee has recovered the approximate amount of $132,629.50. The Estates of Warmus and American Way have split the recovery so that each has been paid $66,314.75. This litigation involved significant research on complex lien and attorney ethic issues. Total legal fees incurred in connection with this matter are approximately $8,000.
J. Morganroth Adversary Proceeding By way of this adversary proceeding, the Trustee sought to recover certain post-petition distributions from the Mr. Warmus' IRA, in the aggregate amount of approximately $111,000. The resolution of this adversary proceeding will largely turn upon the Court's ruling in the main bankruptcy case on the Trustee's motion to strike the Debtor's belated claim of exemption in his IRA. Although disputed by the Morganroth defendants, the Trustee contended that the distributions are recoverable as property of the Liquidating Trust if they are not deemed exempt. This adversary proceeding represents a potential benefit to the Estate of approximately $111,000. In addition, the Trustee has identified another $110,000 post-petition distribution made from the IRA to Mr. Warmus himself. Although not part of the Morganroth adversary, the Trustee may attempt to collect these funds from Mr. Warmus if the IRA is ruled non-exempt. Accordingly, Greenberg Traurig's efforts in seeking to strike Warmus' claim of exemption in his IRA may ultimately represent a total benefit to the estate of approximately $221,000. Total legal fees incurred in connection with this matter are approximately $43,000.
K. Dischargeability Adversary Proceeding The Trustee and his counsel also attempted to deny Mr. Warmus' discharge, thereby permitting the creditors to continue pursuing Mr. Warmus' assets in the future to satisfy the outstanding amounts of their claims. The Trustee presently has pending a Motion for Summary Judgment on this issue, which has been argued before the Court. However, the Court has not yet ruled on the Motion for Summary Judgment awaiting the resolution of the trials of the adversary proceedings and other matters. Total legal fees incurred in connection with this matter are approximately $2,300.
L. The Recovery and Sale of Personal Property. In April, 1996, Judge Ray granted a motion filed by the Trustee and ordered Mr. Warmus, his agents and any individuals or entities controlled by Mr. Warmus to deliver certain property to the Trustee, which Mr. Warmus had previously refused to deliver claiming such property as exempt, disregarding Court Orders or stating that such property was truly owned by his wife, friends and family members. After the Trustee successfully convinced the Court to compel Mr. Warmus to deliver this property, the Trustee was able to sell this property for more than $1,500,000 in 1996. This property consists of the following:§ Approximately $87,500 reflecting the Estate's fifty per cent interest in a cottage located in Bellaire, Michigan;§ Approximately $84,500 reflecting an airplane hangar and lease relating thereto located in Antrim County, Michigan;§ Approximately $620,000 reflecting the Estate's interest in an airplane hangar, personality located therein and lease relating thereto, located in Oakland County, Michigan;§ Approximately $302,860 reflecting the Estate's interest in certain condominium units located in Broward County, Florida;§ Approximately $1,060,000 reflecting the Estate's interest in the Debtor's former residence located in Franklin, Michigan;§ Approximately $31,200 reflecting the Estate's interest in personal property, which is not the subject of an adversary proceeding.

Objections to Claims

In addition to the recoveries discussed above and other recoveries too numerous to mention in full, the Trustee has successfully challenged and correspondingly reduced the claims filed against the Estate. For every claim dollar the Trustee has successfully challenged, the percentage distribution to creditors would naturally increase. The Trustee's most notable claim objections are set forth below. The aggregate amount of fees incurred by Greenberg Traurig in connection with objections to claims is approximately $80,000.
A. Northtown Claim Objection On April 4, 1995, Northtown filed a Proof of Claim asserting an unsecured, non-priority claim against Mr. Warmus' Estate in the amount of $458,265.55 (the fourth largest unsecured claim asserted against the Estate). The Trustee traveled to New York State to negotiate a settlement and subsequently objected to the Northtown Proof of Claim and litigated the merits of the claim in an evidentiary hearing in the Bankruptcy Court. As a result of the objection and the litigation efforts, the Court entered an Order Disallowing and Striking Claim No. 20 filed by Northtown Properties, which completely disallowed the Northtown claim. The Court's Order thereby reduced the total amount of unsecured claims by $458,265.55, permitting a greater pro rata distribution to all other unsecured creditors for each distribution from the Liquidating Trust. The total legal fees incurred in connection with this matter are approximately $23,000.
B. Michigan Claim Objection The Trustee was successful recently in obtaining an Order Disallowing and Striking All Claims Filed by the State of Michigan (issued April 6, 1998), which disallowed a priority claim in the amount of $129,980.94, and an unsecured claim in the amount of $33,315.10. This result was made possible by Greenberg Traurig's efforts in preparing and filing the Michigan claim objection, conducting discovery and analysis of the claim, and litigating the claim in an evidentiary hearing before the Bankruptcy Court. The disallowance of the $129,980.94 priority claim is particularly significant, because the State of Michigan would have recovered on that claim in full before unsecured creditors would have received any distributions. In other words, the disallowance of the priority claim represents a direct benefit to unsecured creditors of $129,980.94. Not only did this victory result in the disallowance of the approximately $130,000 priority claim asserted by the State of Michigan, but it also freed up for distribution to creditors an additional $130,000 which was sitting in a "reserve" account being held by the Trustee pursuant to a previous Court Order. The total amount of the Michigan claims disallowed on this matter was $163,296.04. The total legal fees incurred in connection with this matter were approximately $7,000.
C. Nancy K. Dailey Claim ObjectionNancy K. Dailey, the Debtor's wife, filed claims in the aggregate amount of $5,856,763.82 against Mr. Warmus' bankruptcy estate. Of this amount, $330,184.20 was asserted as a secured claim; $138,074.15 was asserted as an administrative expense claim; and $5,388,505.47 asserted as a general unsecured claim. Accordingly, absent the objections and work by the Trustee and Greenberg Traurig, Ms. Dailey would have received a total of $468,258.83 ($330,184.20 secured claim plus $138,074.15 administrative claim) before unsecured creditors received any distribution. As a result of the Trustee's objections, Ms. Dailey's secured claim of $330,184.20 was disallowed in its entirety, her unsecured claim of $5,388,505.47 was disallowed in its entirety; her administrative claim was reduced from $138,074.15 to $10,468.20 (subject to subordination claims of the Trustee). Accordingly, the total amount of Ms. Dailey's claims disallowed or reduced on this matter was $5,378,037.27, a good portion of which resulted in a dollar for dollar benefit to the Estate as it included the disallowance of secured and administrative claims. The total legal fees incurred in connection with this matter were approximately $9,500.

Conclusion

The results obtained through the efforts of the Trustee and his counsel was significant. Doubtless, the case was more costly, trying, and lengthy than expected. However, this is directly reflective of the tactics enacted by Mr. Warmus and his colleagues. As Judge Ray found in a lengthy Memorandum Decision on October 3, 1997:
Memorandum Decision at 21.
The Court docket and record of this case reflect the unusual complexity and time demands of this case and the highly litigious nature of the Debtor and Dailey, which substantially increased the expenses of administration. The record further reflects the high number of emergency matters that GTH was forced to address and emergency hearings they were required to attend.Memorandum Decision at 22.
Furthermore, the Court finds that the Debtor and Dailey have made a well-documented practice of obstructing GTH's efforts and are the immediate cause of a substantial portion of the fees and costs requested. The Court finds that Dailey and Warmus have significantly increased the fees incurred by GTH by, inter alia, refusing to cooperate in turning over property of the estate, repeatedly objecting to GTH's discovery, refusing to comply with Court orders, filing numerous motions for rehearing and otherwise delaying the proceedings of the case. Without commenting on the merits of any pending adversary proceeding, the Court notes that GTH has filed ten adversary proceedings, each seeking to recover property of the estate which the Debtor has allegedly transferred to Dailey and/or other insiders who have similarly resisted the Trustee's efforts to locate and recover the transferred property. In light of the high level of activity which has been necessary to administer this case, and the continuous delay tactics of Warmus and Dailey, GTH's fees and costs are entirely justified.Memorandum Decision at 24.
This case also presented novel and difficult issues not typical to those of a standard Chapter 11 case. Specifically, this case presented complex issues of insurance and tax law, as well as jurisdictional questions between this Court and various state courts. Moreover, the case was made substantially more difficult as a result of the relentless opposition and obstruction presented by the Debtor and those affiliated with him throughout the case.Memorandum Decision at 28.
In addition, the Court notes that at the time GTH was retained, the estate had no cash and the Debtor had claimed virtually all of the Estate's assets as exempt. GTH had been involved in the case for over one year prior to the first infusion of substantial monies into this estate, and GTH had incurred substantial fees during such period. But for GTH's efforts in this case, the Estate probably would not have any significant assets with which to pay fees to GTH or any of the creditors.Opinion of Judge James D. Gregg, Chief Judge, United States Bankruptcy Court for the Western District of Michigan:The Chapter 11 trustees in the bankruptcy cases of debtor-corporation and its debtor-principal brought two adversary proceedings, subsequently consolidated for purposes of discovery and trial, seeking to recover allegedly fraudulent prepetition and postpetition conveyances of automobiles, "collection cars," a boat, and an airplane, and/or the value thereof. During pendency of adversary proceedings, estates of debtor-corporation and its wholly-owned subsidiary, which also had filed a Chapter 11 petition, were substantively consolidated. Following court trial, the Bankruptcy Court James D. Gregg, Chief Judge, held that: (1) estates of debtor-corporation and debtor-subsidiary were substantively consolidated nunc pro tunc; (2) trustees established by clear and convincing proof, under the Bankruptcy Code and under Michigan's and Florida's versions of the Uniform Fraudulent Transfer Act (UFTA), that transfers of all automobiles and collection cars at issue, except two, were made with actual intent to defraud; (3) transfer of boat was avoidable as an unauthorized postpetition transfer (4) because no transfers were arms length and none of the transferees received property in good faith, judgment would be rendered against each transferee-defendant in an amount representing the value of property transferred to them at time of conveyance, without reflecting any claimed offset or lien; (5) trustees also were entitled to recover specified cars, certain sale proceeds that had been placed in escrow by transferee, and boat that had been fraudulently transferred which then would be liquidated by trustees; (6) debtor-principal, not his son, owned airplane, and so trustees had legal title to it; (7) transferees failed to offer sufficient proof to support their counterclaims; (8) single judgment, encompassing all relief awarded in both proceedings, would be entered; (9) prejudgment interest would be awarded only with respect to the escrowed funds, pursuant to trustees' request; and (10) trustees were entitled to postjudgment interest.

Thomas Warmus was convicted on July 30, 2002 of hiding millions of dollars in assets from the bankruptcy court and creditors after filing for bankruptcy protection for himself and for his company in 1994. He faces felony charges in Michigan and in Florida for his illegal schemes. Warmus will be sentenced on October 10, 2002, and faces up to five years in prison on each of the four counts he has been convicted of. Nancy Kay Dailey, his wife, testified against her husband after a plea bargain, and is currently serving a one-year sentence of home confinement.

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