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August 31, 1995

ROVANCO CORP., Defendant.

The opinion of the court was delivered by: MILTON I. SHADUR

 This Court has conducted an evidentiary hearing (the "Hearing") in connection with the motions for the entry of turnover orders and citations to discover assets that Consolidated Pipe & Supply Co., Inc. ("Consolidated"), a judgment creditor of Rovanco Corp. ("Old Rovanco"), has launched against two targets: Rovanco Piping Systems, Inc. f/k/a Rovanco Acquisition Corporation ("New Rovanco") and John Kolleng ("Kolleng") as assignee for the benefit of creditors of Old Rovanco ("Assignee"). *fn1" Each side has tendered proposed findings of fact ("Findings") and conclusions of law ("Conclusions"), and this Court hereby issues its Findings and Conclusions in accordance with Fed. R. Civ. P. ("Rule") 52(a). To the extent (if any) that the Findings as stated may be deemed conclusions of law, they shall also be considered Conclusions. In the same way, to the extent (if any) that matters later expressed as Conclusions may be deemed findings of fact, they shall also be considered Findings. In both those respects, see Miller v. Fenton, 474 U.S. 104, 113-14, 88 L. Ed. 2d 405, 106 S. Ct. 445 (1985).

 Findings of Fact

 1. Old Rovanco is a Delaware corporation whose principal place of business was in Joliet, Illinois. Its business consisted of the manufacture of piping systems and the sale of factory-fabricated and engineered piping systems on a wholesale basis.

 2. In the early 1980s Eugene Cashman ("Cashman") became Old Rovanco's majority shareholder, owning 51% of its stock until 1992. At some point in time Cashman loaned approximately $ 300,000 to Old Rovanco, and in conjunction with that infusion of capital his stock interest increased to approximately 78%. Throughout the period of his ownership the remaining stock of Old Rovanco was owned by Lawrence Stonitsch ("Stonitsch") and his brother Richard in equal shares. Stonitsch, who had originally founded Old Rovanco in 1970, was its President and Chief Operating Officer, with Cashman serving as Chairman of its Board of Directors ("Board"). Except for Stonitsch and his brother Richard (who was also Old Rovanco's Vice President), all of the other Board members were Cashman designees.

 3. Richard Vetter ("Vetter") is an officer of several businesses owned by Cashman. About 1980 Vetter was placed on Old Rovanco's Board to serve, as he testified, as a "representative of Mr. Cashman's interests." In 1991 Vetter brought Charles Ray ("Ray") into Old Rovanco to provide additional management and to have a direct line into corporate affairs on behalf of Cashman. Ray became both the Chief Executive Officer and a Board member of Old Rovanco.

 4. From about 1989 through virtually all of 1994 Old Rovanco experienced substantial operating losses, although its performance had improved significantly from the time that Ray had been brought into corporate management until the end of 1993. For the first three months of 1994, however, Old Rovanco's reported loss was approximately $ 750,000.

 6. Innisbrook's President Jacques Hopkins ("Hopkins") formed Innisbrook in 1991 to act as a "merger and acquisition intermediary for troubled and bankrupt companies." Innisbrook's practice is to market a company quickly in an effort to solicit purchase bids by a short deadline. Normally Hopkins implements a marketing schedule for the transaction lasting 90 to 120 days.

 7. In this instance Hopkins analyzed Old Rovanco's operations and prepared an evaluation, concluding that the company could be sold for $ 4.5 million. Innisbrook and Old Rovanco then entered into the July 28 Innisbrook Agreement, establishing a 60-day deadline (to September 28, 1994) for parties to bid on Old Rovanco.

 8. Hopkins promptly began efforts to market the Assets on a national basis, attempting to flood the potential market through newspaper ads and a mass mailing to possible purchasers. For that purpose Hopkins prepared a two-page direct mail flier with information relating to Old Rovanco's business operations and initially distributed about 6,600 pieces of the direct mail flier, then remailed some 2,800 pieces to individuals and entities associated with the piping industry. Once Hopkins identified someone as a potentially serious buyer, he provided that prospect with detailed information about the company and its financial status. Hopkins also scheduled plant inspections and encouraged potential buyers to submit a bid by the September 28 deadline.

 9. Meanwhile, in July 1994 Stonitsch and co-investor Dale Sobeck ("Sobeck") had attempted to work out an arrangement to purchase Cashman's stock in Old Rovanco. Stonitsch wanted to continue operating the business, and he intended to control the company and negotiate with vendors for a reduction in payables in an effort to do so. It was after rejecting the Stonitsch-Sobeck letter offer that Board decided to put Old Rovanco up for public sale.

 10. To return to Innisbrook's mailing, it specified a sealed bid deadline of September 28, 1994 for offers to purchase Old Rovanco's assets. Only a few offers were received before that date. Taconic Capital (acting through Tom Wippman, and with Stonitsch as a proposed coinvestor) submitted a written proposal to purchase the Assets as a going concern, but later withdrew that proposal because of Taconic's inability to obtain the requisite financing. Camellott Corporation (acting through Dan Songger) submitted a going-concern bid of $ 3 million, but it was ultimately rejected by Old Rovanco. MFRI (acting through David Unger) also submitted a bid that was ultimately rejected by Old Rovanco.

 11. On November 4, 1994 Stonitsch, acting for himself or his designee referred to as "Newco," *fn3" submitted a letter of intent ("Newco Purchase Offer") for the purchase of the Assets as a going concern. In material part the Newco Purchase Offer provided that Newco was to acquire the Assets free and clear of all liens and encumbrances from an assignee for the benefit of creditors to whom the Offer required the Assets to be transferred by Old Rovanco, with the purchase price for the Assets being the sum of (a) $ 450,000 plus (b) the amount of Old Rovanco's secured indebtedness to American National Bank and Trust Company of Chicago ("Bank"). Old Rovanco immediately accepted the Newco Purchase Offer.

 12. On November 21, 1994 Old Rovanco made the assignment for the benefit of its creditors that was required by the Newco Purchase Offer by executing a Trust Agreement and Assignment for the Benefit of Creditors ("Assignment"), appointing Kolleng as Assignee and assigning the Assets to him as Assignee. Under a contemporaneously executed Addendum to the Assignment, Assignee approved, assumed and agreed to be bound by the terms and conditions of the Innisbrook Agreement as well as the Newco ...

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