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Hercules Capital, Inc. Message Board

  • mthiker2004 mthiker2004 Dec 28, 2009 12:35 PM Flag

    The tangled web of Spa Chakra 5th Avenue

    12/28 from the latest bk filings:

    Sale motion has not been filed yet, despite Spa Chakra's "expectation" of filing by 12/24.

    New allegations:

    On Nov 11, 2009, Spa Chakra Pres Canazales told George Kober of GVK, that Spa Chakra's 9 month EBITDA was $7.5m. Shareholder equity was reported at $20m for 2009 (although reported as $3m in the bk filing).

    GVK has opposed the debtor in possession financing by HTGC and is seeking a debtor examination. GVK was one of the three creditors that filed the involuntary Chapter 7. The principal of GVK is George Kolber. Kolber is the cousin of Rick Aidekman, one of two sellers of Cornelia, the other seller being Aidekman's wife. GVK and Kolberg Properties, LLC loaned Cornelia more than $1m, secured by, among other things, Aidekman's home. Kolberg and his business partner then brokered the sale of Cornelia to Spa Chakra. Spa Chakra now claims that Koberg aided in the falsification of of information material to the terms of the sale, including the understatement of hundreds of thousands of dollars of gift card sales. Spa Chakra is at least hinting that GVK/Kolberg may be named as additional defendants in the state court action (NOT fed court) in NY, against the sellers.

    IMO, the state court issues are messy and unless resolved, are likely to slow the sale/bk process as to Spa Chakra, Inc. Keep in mind that Spa Chakra 5th Avenue is only a portion of Spa Chakra, Inc. and not a reflection on the entire organization ... just one recently (2/09) acquired location.


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    • More from the schedules and financials:

      Financial statements provided by Chakra, monthly, to HTGC, since 9/08.

      Shareholders of Chakra: Chakra Ventures II, 30.2%; York Capital Mgmt (NY), 11.2%; Manzanita Tranche (UK), 17.72%; Paul O'Belne (WA), 7.94%.

      Handful of pending actions against Chakra: Cornelia Fifth Avenue (mentioned previously); several breach of lease actions; one apparent collection by a printing service; one apparent collection by Snelling Personnel (just be glad it's NOT Staffmark!); one whistleblower action in Florida.

      From the financial schedules, assets of $5.3m in personal property ($1.16m office equip; $4.16m fixtures and supplies), secured liabilities of $13.7m (HTGC only) and unsecured liabilities of $2.4m. No "cash on hand" listed. Of unsecured creditors, CEO Canizales ($580k) and Paul Living Trust ($1.6m) are the largest. Of course, none of this includes contingent or unliquidated claims.


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