Kaypro Founder Wins Round in Fight to Control Company
The balance of power at Kaypro, the strife-torn computer company, shifted in favor of founder and chairman Andrew Kay on Wednesday when a U.S. bankruptcy judge appointed Leonard Kneeland as the fifth Kaypro board director.
The newly constituted Kaypro board immediately fired Roy Salisbury, whom Kay had hired as Kaypro chief executive in February but with whom Kay had become mired in a bitter power struggle.
Meeting at an attorney’s office after the bankruptcy court hearing, the board replaced Salisbury with Ben Fisher, a longtime Kay associate and former Kaypro employee. Fisher was nominated as interim president at Kay’s urging by a committee of minority shareholders, who also agreed to the appointment of Kneeland to the Kaypro board.
U.S. Bankruptcy Judge James Meyers deferred until July 13 a ruling on whether to appoint a trustee for the troubled personal computer company. Kaypro filed under Chapter 11 of the U.S. Bankruptcy Code on March 1 and has since ceased manufacturing and laid off all but 10 employees.
Kneeland joined Kay, his wife Mary, Salisbury and Mark Seaver, an associate of Salisbury’s, on the Kaypro board. Salisbury had recommended unsuccessfully that the judge appoint his associate, Tom Lennon, as the fifth board member. Judge Meyers left the appointment decision largely up to the committee representing minority shareholders, observers said.
In a brief statement through a Kaypro spokesman Wednesday evening, Salisbury said he and Seaver would remain as Kaypro directors until a shareholders meeting can be held to approve the new board.
The appointment of Kneeland and Fisher is Kaypro’s best chance to “reorganize under a unified direction” and to end the company’s internal corporate warfare, said John Smaha, an attorney who represents Andrew Kay.
That warfare was characterized by Salisbury’s April 2 firing of Kay, who founded Kaypro and who is the company’s largest shareholder. Salisbury accused Kay of mismanagement and misuse of corporate assets.
In filings with the Securities and Exchange Commission, Salisbury and his team said Kay and the company are the subjects of numerous investigations by regulatory and law enforcement agencies.
The SEC has requested Kaypro’s accounting records for its 1988 and 1989 fiscal years, according to the SEC filing. Also, the San Diego County Sheriff’s Department is looking into bad checks purportedly issued by Kaypro totaling $365,000.
In addition, Kaypro owes the Internal Revenue Service about $1 million in unpaid employee withholding taxes, Salisbury said in a recent interview.
