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Nets Creditors Sue Manzi Over Loan Claim

Bloomberg News

Nets Inc.'s creditors’ committee sued Jim Manzi, the former Lotus Development Corp. head who founded the Boston-based start-up, saying his claims to about $1.43 million in loans before the start-up went bankrupt shouldn’t be paid before their claims. The suit, filed in the U.S. Bankruptcy Court for the District of Massachusetts, asks that Manzi’s claims be disallowed or reduced. The suit objects to Manzi’s classification of his advances as secured loans. Manzi’s knowledge of the difficulties the company was having in raising funds was a conflict of interest, and his claims for repayment shouldn’t receive preferential treatment, the suit contends. Nets Inc. ran Industry.net, which tried to match buyers and sellers of industrial goods and services on the Internet. Perot Systems Corp. bought the company for $9 million after it went bankrupt in May. Manzi has until Sept. 21 to file a response to the lawsuit, said Richard Mikels, Manzi’s lawyer. “The loans he [Manzi] made were beneficial--the result was it was able to be sold to Perot as a going concern,” Mikels said. “We hope creditors will recognize that and reconsider their objections.”


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