Parker Resigns CEO Post, Citing Legal Problems
Michael E. Parker resigned Tuesday as chief executive officer of Parker Automotive Corp., saying his ongoing legal problems were interfering with the operations of the company.
The resignation was a result of a compromise reached Monday in federal bankruptcy court between Parker Automotive and creditors of Parker North American Corp., another company Parker founded. The court also agreed to remove a court-appointed receiver for Parker Automotive.
Parker is expected to be replaced as chief executive by Ronald L. Cedillos, a Parker Automotive director and president of Cedillos Testing Co., a Long Beach aerospace company. Parker, who is also chairman, will remain as a director and continue to be involved in sales and marketing for Parker Automotive, the company said.
The company’s stock also resumed trading Tuesday on the over-the-counter market, a week after Parker Automotive asked that trading be suspended pending an announcement. The announcement concerned a distribution contract with a Spanish company. Parker Automotive stock closed at $7 a share Tuesday, down 75 cents.
In announcing that he was giving up day-to-day control of the company, Parker referred to claims against him and to a previous statement that he would step aside if those problems interfered with Parker Automotive’s operations.
“Recent events have convinced me that the time has come for me to do just that,” he said in a statement.
Parker’s legal problems surfaced when he was sued this summer by Columbia Savings & Loan Assn. of Beverly Hills in federal court in Los Angeles. The thrift alleged that Parker and Parker North American, which leased bank equipment to financial institutions, defrauded the thrift of as much as $13 million. Among other things, the lawsuit alleges that PNA, which filed for Chapter 11 bankruptcy in March, 1989, paid kickbacks to a Columbia official.
According to court documents, the FBI has also investigated PNA financial dealings.
A federal bankruptcy examiner’s report recently found that millions of dollars of Columbia’s money were traced to Parker’s personal bank accounts and to members of his family and his business associates.
Creditors have alleged that Parker improperly moved $3.5 million from PNA to Parker Automotive before the leasing company filed for bankruptcy last year. They obtained a court order effective Nov. 19 naming a receiver to review Parker Automotive’s books.
Parker has denied any wrongdoing.
“I cannot allow the confusion that is generated by the outrageous allegations being made against me to interfere with the growth and potential” of Parker Automotive, he said in a statement Tuesday.
The company said in its statement that representatives of the receiver admitted in a Nov. 21 hearing in bankruptcy court that “they were unable to find any unusual transactions between Parker Automotive Corp. and Michael E. Parker.” The hearing was closed to the public and others involved would not comment.
In a second hearing Monday, PNA creditors sought to have Parker removed from Parker Automotive’s board. But officials of the company, which makes fuel-cleaning equipment for auto engines, said Parker was important to the firm’s success and is skillful at bringing in new business.
While bankruptcy court Judge John E. Ryan agreed that the creditors had a “substantial claim” against Parker Automotive, he removed the receiver over the creditors’ objections. Ryan said the company had a better chance of prospering and the creditors a better chance of being repaid--they have a lien on the 44% of the company’s stock that Parker owns--if Parker Automotive was led by its own management.
In his statement, Parker said he had confidence in the new management team that--with board approval--would be headed by Cedillos. That team would also include Eric A. McAfee, chief financial officer; Donley L. Lincicome, vice president, operations; Mark C. Wessel, vice president, international sales; and Diane M. Parker, vice president, investor relations, and Parker’s sister.
Missing from the management team list, however, was Timothy L. Strader, a local developer who became Parker Automotive’s president and chief operating officer in September after news of Parker’s troubles surfaced.
Diane M. Parker said Tuesday that Strader’s future with the company is uncertain. She said Strader is currently in Korea. He could not be reached for comment.
Meanwhile, the company said it had signed an agreement with Medosa Servicios, S.A., part of Spain’s large CEPSA group of companies, to distribute its equipment. Parker Automotive said that while CEPSA has agreed to sell a certain amount of Parker Automotive products, it is not bound to do so.
Parker said the contract was a “breakthrough” for the company and marks the first time it has had a deal with both a user and distributor of its products.
The company said that word of the CEPSA deal had leaked out last week, prompting it to ask the stock exchange to suspend trading in its shares.
