Self Heating and Cooling, Inc., Transferee - Page 5

                                        - 5 -                                         
               purpose of evading the motor fuel oil excise tax.  The                 
               assessments were for approximately $6 million including                
               penalty and interest.  Obviously, if successful, the State             
               would put Self Oil out of business.                                    
               A plan was devised by WKS and myself to form a new                     
               corporation (“Newco”).  Since Self Oil is entirely owned by            
               Bob, and Bob was winding down his involvement in the                   
               business, Newco was to be owned by Rob and his brother                 
               Jonathan.  The idea was to renew all new customers and                 
               existing customers in to Newco as well as all new HVAC                 
               installations and servicing, while renting the trucks,                 
               facilities and utilizing the personnel of Self Oil.  The               
               thought was that we can justify creating Newco since Bob               
               wanted to retire but the sons would be unwilling to step in            
               to Self Oil given all of its liability exposure and                    
               therefore they would agree to “acquire” the business by                
               paying Bob’s company an administrative fee for the right to            
               take over the customers and use Self Oil’s infrastructure,             
               with the intent eventually of taking over the personnel, the           
               facilities and buying the equipment and vehicles.  By doing            
               this, it was our goal to leave Self Oil with no real value             
               so that an eventual judgement by the State would not impair            
               the ability of continuing the business, albeit through                 
               In order to allow us to transition the business to Newco, it           
               was agreed that we would appeal the assessments as long as             
               we could to buy time.  I therefore started the                         
               administrative appeal process with the State, again keeping            
               in mind that the principal goal was delay with the remote              
               possibility of convincing the State it was wrong.  Everyone            
               acknowledged that it was very unlikely that we would have              
               any success in the administrative appeal process.  We never            
               really evaluated the liklihood [sic] of success in court it            
               being understood that when that time came, we would look at            
               where we were in the transition of the business and                    
               determine whether pursuing the case any further was                    
               justified.  I believe everyone felt the liklihood [sic] of             
               success was not great and that was the reason for                      
               accelerating the transition, which in fact occurred.  This             
               point was driven home even further when Self Oil later got             
               an assessment from the State of Ohio for approximately $2              
               million.  I believe the general feeling was to drag it out             
               as long as possible and then just walk away and defend any             
               action for transferee liability which the States may                   
               [Emphasis added.]                                                      

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011