Shareholders Act; Parker Automotive Management Quits
Shareholders of troubled Parker Automotive Corp. voted Tuesday to ask a federal bankruptcy court judge to appoint a top manager for the maker of engine-cleaning devices, at which point the company’s current managers and directors promptly resigned.
The shareholders elected to the board a former vice president of sales--who was laid off just last week--and a stockholder after most of the other directors resigned.
The company, dogged by troubles since last year, filed for bankruptcy last month under Chapter 11 of the Federal Bankruptcy Act. Under Chapter 11, a company attempts to reorganize while it is protected from its creditors and perhaps emerge from bankruptcy as a going concern.
But Parker Automotive’s prospects aren’t very rosy. A federal bankruptcy judge has given the company until Sept. 20 to come up with enough cash to keep operating or, the judge says, he will order all its remaining assets sold.
The former vice president of government and fleet sales elected to the board Tuesday, John E. Weber Jr. of Irvine said the company will ask the judge to delay that ruling--perhaps as much as two more months--so it can find more cash.
“The place is bringing in about $200,000 a month, which would be enough to operate if we weren’t so far behind” on debts, Weber said.
During Tuesday’s meeting, Weber accused the company’s latest top managers--in office only a few months--of ineptitude.
When some of the 40 shareholders attending the meeting voted to ask the court to appoint a new top manager, Chairman Byron Romig and acting President Dennis McCarter resigned from the company and its board.
Separately, a bankruptcy court judge in San Francisco ruled Monday that Michael E. Parker, the company’s founder, may not regain control of the biggest bloc of stock in the company, the company said.
Parker turned control of a 40% stake in the company over to Texan Connie C. Armstrong Jr. in return for a $3-million cash infusion earlier this year.
But Armstrong and one of his companies, Hamilton Taft & Co., are now under federal investigation for misusing clients’ money.
Hamilton Taft handled employee withholding tax payments for its client companies. And the money Armstrong used to buy control of Parker Automotive came from San Francisco-based Hamilton Taft, according to a trustee for Hamilton Taft, which is also in bankruptcy.
That trustee wants to keep control of the Parker stock in hopes of recovering the $3 million Armstrong sank into Parker Automotive.
This is the latest setback for Michael Parker, who faces trial next month on federal charges of defrauding Columbia Savings & Loan in Beverly Hills of as much as $13 million.
