An emergency motion to place Fair Finance Co. into involuntary Chapter 7 bankruptcy was filed this morning in U.S. Bankruptcy Court in Akron.
The motion, filed by attorneys David Mucklow in Green and Michael Moran in Cuyahoga Falls, asks the federal court to appoint an interim trustee for the accounts receivables and consumer loan firm that is under investigation. Akron-based Fair Finance has been closed since FBI raids Nov. 24 on its headquarters and a related business in Indiana.
Ohio residents who purchased investment certificates from Fair Finance may be out hundreds of millions of dollars, Mucklow and Moran said in their filing.
Court documents show that federal investigators suspect Fair Finance was being run as a Ponzi scheme.
''Neither the debtor [Fair Finance] nor its owners can be trusted to run the business of the debtor, and the situation requires the appointment of an interim trustee to take possession of property and to operate the business of the debtor in order to protect and preserve the assets of the debtor for the benefit of creditors,'' the lawyers said in their motion.
The lawyers say they represent about 100 unsecured creditors who purchased more than $6 million in investment certificates from Fair Finance, which does business as Fair Financial.
The filing says that the lawyers believe their clients represent less than ''five percent of outstanding certificate holders and that the total value of outstanding certificates is in the hundreds of millions.''
Chapter 7 bankruptcy involves the liquidation of a company, with a court-appointed trustee able to make management changes and get financing.
Mucklow and Moran sponsored an informational meeting Jan. 28 at Green High School on their proposal to place Fair Finance in involuntary bankruptcy. More than 400 people attended the meeting.
Columbus-based attorney David Meyer filed unrelated paperwork last week asking Summit County Court of Common Pleas appoint a receiver for Fair Finance. Meyer is seeking class-action status for a lawsuit he filed in December against the company.
Jim Mackinnon can be reached at 330-996-3544 or firstname.lastname@example.org.