I UNITED stares assumes COURT Manama: 3 MIDDLE DISTRICT OF Panama - some JACKSONVILLE FEB 1 3 309?: at $3135- ?Massif; In re ?Warm 1:213:93? Case N08. thmugh on BRUCE LEE I ENNINGS, at 31., I All eases Jointly Administered Under Cass N0. APPLICABLE DEBTORS: 3' atlasesa Inc, {Case No. 03~?4928?3Fi) BRANDGN JAMES SECQND APPLICATIDN TO SELL CERTAIN ??jl?TE FREE CLEAR OE Alia; Branden James Max ?eld {?Max?eid'm an unsecured erediter, sets tn the second appliestiun to sell certain estate {impart}? free and else: at? ail liens (pleading 4i) 0] ?led by Bryan Anne, Iue. {?Eryen??, and in support of the ehjeetiun states: 1 . Max?eid is the huidsrefa $24374, 146.53 judgment against Ewen, Jennings and 3.2L. Jennings, Inc. By virtue therenf, Mantield is by far the largest craditar (if these estates. 2. Dehtnr, Bryce Arms, is part of the infamous ?Ring nt? Fire? - a enlleetiun of manufacturers who pruduee nothing but cheap handguns.I The ether members nf this greup include Davis Industries, Phuenix ArmaLRaven Arms and Sundanee Industries, which are all nwned by Jennings? relatives, and Lnrein Engineering (30., awned in; a high seheul friend {if Jennings. The name ?Ring. of Fire? was ?rst eeined by Dr. Garen J. Wintemute, a publie health pin fesser at the Universitya EC alifnmia at Davis, studies the links 13 etween cheap handguns and crime, 3. The ?Ring of Fire? members routinely use bankruptcy as a means of dealing with lawsuits and other litigation aimed to put them out of business. For example, Lorcin Engineering and Davis Industries have already ?led bankruptcy and re~emerged in different tonne. Jennings obviously has similar intentions to manipulate the hanlo'uptev process. For enamele, in 1997, he was quoted as saying "They can never put me out of business.? Gene in deserts-er Holly Yeager, Hearst Newspapers, 1953?. Later, it: 1999, Jennings responded to a reporter?s questions about the industry?s rattantensityr to shut businesses down and resurrect them by saying in almost a joking fashion: ?It doesn?t mean they?li he gene forever.? No Surrender-free: Mr. Sehrrdoy Night Special, Businessweelt Unline, August 16, 1999. 4. Gonsistent with this strategy, Bryco?led an application on Felzus'uarj.F 3, 2064 seeking permission to sell certain estate prop ertv, namely inventory, equipment and ?nished goods, free and elear of suit}.r liens or encumbrances to Paul Jimenez for $1 $8,000. Mr. Jimenez is the shop foreman at Bryon and, up until Bryco?s closure in January of this year, was earning an annual salary of only $36,0tl? per year. He clearly' does not have the resources to fund the purchase the assets for $1 50430th without outside hacking. More likely than not, that backing is coming from Bruce I enniugs or his family memhers,2 5. The tweeter}:I and equipment being sold was valued at $215,130!) in the debtor?s haukrup to}; schedules -. after being written down on the corp oration?s books by Jennings immediately prior to the bankruptcy ?ling. Bryce fails to explain why this inventory and equipment should now he sold at private sale for only 6. Bryce has already made the decision to cease business operations and, in feet, has tenninatetl all of its employees. The case should therefore be eenverted to Chapter 1' with a neutral trustee appointed to liquidate the inventory and equipment through public 3 Bryce has a history of op stating its business surreptitiously. example, Bryce once directed a secretary, Claudia Gonzales Mellado, to open a checking account under her initials through which all financial transactions of Bryon were eoudueted for approximately months in order to avoid creditor claims. 8. Finally, the application tines not contain a suf?cient description nfthe assets being said. Speei?eally, the applieatien tines not indicate whether the proposed sale includes Bryan's. drawings, molds, gnedwill and tradenames. Other parties are interested in bidding en Bryan?s assets, but desire an iiemizatien tn ensure that they Would receive the benefit of their bargain. Requiring Bryce to itemize the assets being sold will alsn discourage items ?'em ?slipping out the hack dean? WHEREFGRE, Max?eld requests the entry of an order denying the dehtnr?s applicatien to sell assets at private sale, requiring a public auction of the inventor}: and equipment, requiring an itemizatien (if the assets being seid, and (iv) granting such other relief as is STUTSMAN 3r, THAMES, PA. If; I. Richer I Florida Bar Number 01'13459 121 West Ferayth Street, Suite 6G0 Flnrida 322112 (904) ass-sane (9G4) 35344001 {Facsimile} BY g- R. names Attemeys fer Brandon James Maa?eld 7//T/od UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT or FLORIDA JACKSONVILLE DIVISION In re: CASE NO. and 034928?31?! through BRUCE LEE JENNINGS, et ah, Debtors. Jointly Administered I APPLICABLE DEBTOR BRYCO ARMS, INC. Case No. 034928-3131 ORDER ORDER DATED JUNE 22, 2004 APPROVING APPLICATION TO SELL CERTAIN ESTATE PROPERTY OUTSIDE THE ORDINARY COURSE OF BUSINESS AND SCHEDULING AUCTION OF BRYCO ASSETS FOR AUGUST 12, 2004 This case game before the Court upon Written Objection of Creditor Linda Bollard1 to Proposed Sale of Bryce Arms Assets (the ?Bollard Objection?) ?led on July 12, 2004. The factual background is as follows. Brandon James Max?eld (?Max?eld?) is an individual who was injured when a handgun designed by Bruce Jennings manufactured by Bryce Arms, Inc. (?Bryce?), and distributed by BL. Jennings, Inc. Jennings?) accidentally discharged and injured him. Jennings is the owner of BL. Jennings and the principal behind Bryce. Sometime in 2001 Max?eld commenced an action against Jennings, Bryce, and EL. Jennings in California Superior Court to recover damages for the personal injuries he suffered (?Max?eld On May 13, 2003 the jury in Max?eld I found Jennings, Bryce, and BL. Jennings to be 48% at fault for Max?eld?s injuries and found other parties, none of whom are debtors in these bankruptcy proceedings, to be 52% at fault. A judgment of $21,250,650.31 was entered against Jennings, Bryce, and BL. Jennings. On May 14, 2003 Jennings, Bryce, and BL. Jennings ?led voluntary Chapter 11 bankruptcy petitions. On February 3, 2004 Bryce ?led Application to Sell Certain Estate Property Free and Clear of All Liens (the ?Second Motion to Sell?). The Second Motion to Sell sought to sell certain personal property belonging to Bryce to Paul Jimenez (?Jimenez?), Bryco?s former foreman, for $150,000.00. On February 18, 2004 Max?eld ?led an objection to the Second Motion to Sell. The Court scheduled a hearing for March 11, 2004. Upon request of the parties, the Court continued the hearing to April 23, 2004. On April 22, 2004 Bryce and Maxfield ?led Joint Motion for Continuance of Hearing on Dethrs? Application to Sell Certain Estate Property Free and Clear of All Liens and for Order Establishing Bidding Procedures (the ?Motion to Continue?). On that same day the Court entered Order Granting Joint Motion for Continuance of Hearing on Debtor?s Application to Sell Certain Estate Preperty to Paul Jimenez and (ii) Establishing Bidding Procedures (the ?0rder?). The Order continued the hearing to June 17, 2004. The Order noted that if competing bidders were present, the Court would conduct an in-court auction with an initial bid of no less than $150,000.00, 2 ?rst bid increment of $25,000.00, and subsequent bids in increments The Order required Bryce to prepare and present to the United States Trustee and Max?eld a list of all the assets and rights being sold and all rights and assets being retained.2 The Order was served on Bryco?s counsel, Max?eld?s counsel, and the United States Trustee and indicatedlthat a copy of the Order was to be served on all creditors and parties in interest 1 Linda Bollard is a listed creditor of Bryce Arms. 2 On May 13, 2004 Bryce provided Max?eld and the United States Trustee with a list of the assets and rights being sold and the assets and rights being retained. in Bryeo?s ease with a certi?cate of service ?led thereafter. However, Bryeo?s counsel did not serve the Order on all creditors and parties in interest until June 10, 2004. On June 17, 2004 the Court conducted a hearing on the Second Motion to Sell. No competing bidders were present at the hearing. On June 22, 2004 the Court entered Order Approving Debtor?s Application to Sell Certain Estate Property Outside the Ordinary Course of Business (the ?Order Approving Sale?). Although the Court approved the sale, the Order Approving Sale contained the following proviso: Because the June 17, 2004 hearing was not adequately noticed, all creditors and other interested parties, except the United States Trustee and Max?eld, shall have twenty days from the date of this Order to ?le (and to serve upon Quarles Brady, LLP) written objections to the sale. Any objection must speci?cally set forth the grounds upon which it is based. The Court will review all objections and will schedule for hearing only those that are meritorious. The Bollard Objection, which was joined by the City of Chicago and County of Cook, Illinois, and was accompanied by a bid of $175,000.00, was the only meritorious objection ?led. Because the Court has already found that a good business reason exists to approve the sale, the Court?s sole remaining objective is to obtain as much. money as possible for the creditors. To that end, the Court will schedule an auction of Bryco?s assets.3 The Court will not hear argument. It is ORDERED: l. The Court will conduct an auction of Bryan?s assets on Thursday, August 12, 2004 at 1:30 pm in Courtroom 4D, United States Courthouse, 300 North Hogan Street, Jacksonville, Florida. The auction is open to all parties. 3 The assets for sale are those on the list which was provided to Max?eld and the United States Trustee and admitted into evidence as Max?eld?s Exhibit 14 at the June 17, 2004 hearing- 2. The minimum bid is $175,000.00. 3. At the conclusion of the auction, the successful bidder (other than Paul Jimenez) shall tender a cashier?s check or a check written on the bidder?s attorney?s trust account for $175,000.00. The balance of the successful bid shall be paid within seven days of the date of the hearing. DATED this 15 day of July, 2004 in Jacksonville, Florida. 7 deg? Chit ates ankruptey Judge Cepies furnished to: Ned Nashban, Attorney for Bryce Arms, Inc. Paul Jimenez Richard R. Thames, Attorney for Brandon J. Max?eld Joel Grist, Attorney for Linda Ballard United States Trustee All interested parties