Minkow Follows His Firm Into Bankruptcy Court

Barry Minkow, the 21-year-old founder of the ZZZZ Best carpet cleaning company whose stock in the firm was worth more than $100 million earlier this year, has filed for personal bankruptcy.

Los Angeles attorney Yale M. Harlow filed a petition to liquidate Minkow’s assets under Chapter 7 of the U.S. Bankruptcy Code on Friday in U.S. Bankruptcy Court.

“He doesn’t have any substantial assets as far as I know,” Harlow said Tuesday.

But the trustee for ZZZZ Best, which filed for Chapter 11 bankruptcy protection July 8, said he was astonished by the filing.

‘Unfathomable to Me’

“I find that incredible with the amount of money that went through that he has no money. It’s unfathomable to me,” trustee Herb Wolas said.

Minkow resigned as chairman of ZZZZ Best days before the company filed for bankruptcy protection. The firm’s board of directors has since filed suit against him and others, accusing them of fraud, theft and diverting corporate funds for personal use.

In the month before ZZZZ Best collapsed, according to court documents, Minkow signed checks for cash or approved cashier’s checks totaling $3 million.

Los Angeles Police Chief Daryl F. Gates alleged last month that Minkow and ZZZZ Best were part of a narcotics and money-laundering conspiracy involving organized crime. No arrests have been made.

Wolas said he will ask the court “to determine where the assets went.”

Facing Lawsuits

“If those assets have been stolen, and if they were assets of ZZZZ Best . . . I could get them back,” he said.

Harlow said he filed the bankruptcy petition on Minkow’s behalf because Minkow faces several lawsuits and foreclosure proceedings against his $698,000 Woodland Hills home.

A detailed list of Minkow’s assets and debts will probably be filed with the court within 10 days, Harlow said.

“He’s not the rich guy you all think. And he never was, except on paper,” said Arthur H. Barens, another of Minkow’s attorneys.

“To generalize, it all went into the business,” Barens said of $3 million in loans Minkow received shortly before his company’s demise. “That’s what I’ve been told by him and others.”

Minkow, who owned 52% of ZZZZ Best’s stock, recently liquidated some of his assets, including selling his Ferrari, to help pay attorneys’ fees, Barens said.

According to Bankruptcy Court records, ZZZZ Best itself owes creditors $36 million. When Wolas was appointed trustee, he found only $30,000 in cash at the company. Since then, a sale of some of the company’s assets has raised another $62,000.