Sheldon Good's founder 'disappointed and surprised'
(Crain's) — The founder of auctioneer Sheldon Good & Co. said Monday he was "disappointed and surprised" over the allegations lodged against his late son, Steven Good, as part of the company's Chapter 11 bankruptcy protection filing.
"I have no knowledge of the things they're accusing my son of," said Sheldon Good, firm's chairman emeritus, speaking by phone from Rancho Mirage, Calif. He added that he hasn't been actively involved with the company for eight years.
Sheldon Good & Co. said Friday it is "reorganizing to remedy the effects of improper actions" taken by Steven Good, who committed suicide earlier this year.
"These improprieties, which left the company with a shortage of reserves in the face of the current economic downturn, came to light following his death in January 2009," the company said in a statement.
Sheldon Good & Co. President Alan R. Kravets said in a sworn statement filed in court that executives discovered that Mr. Good without permission had "withdrawn substantial monies from the (company's) operating accounts, calling it compensation."
Aside from the missing money, the company is doing well, a lawyer for Sheldon Good & Co. said.
"The debtors found out after he died that a lot of money was missing," said Heidi Sorvino, head of the bankruptcy practice at Smith Gambrell & Russell L.P. in New York, which is representing Sheldon Good & Co. "We believe it is in the millions (of dollars) but we haven't quantified."
The company has assets of about $250,000 and liabilities of about $4 million, according to the sworn statement by Mr. Kravets. One of its largest creditors is JP Morgan Chase Bank, which has a $650,000 disputed claim against the company, according to a court filing.
The companies' reserves have also been reduced by lower sales volume, the affidavit says.
The Chicago-based company, which filed for Chapter 11 in U.S. Bankruptcy Court in New York along with 10 affiliates, said it has "sufficient financial resources" to operate as usual during the Chapter 11 process.
"While operating under Chapter 11 protection, Sheldon Good & Co. will maintain and honor all of its commitments to our customers without interruption," Mr. Kravets said in the statement.
"We believe this filing will allow us to make necessary changes to our capital structure in order to operate efficiently," Mr. Kravets also said in the statement. "We expect a quick proceeding through the court system."
But over the next 30 days, Sheldon Good & Co. is forecasting a cash shortfall of about $215,000, based on predicted expenses of nearly $940,000, and receipts of about $725,000.
On Jan. 5, Mr. Good, who was 52, was found dead of a gunshot wound in his car at the Max McGraw Wildlife Refuge near East Dundee. The Kane County coroner ruled the death a suicide.
Later that month, Mr. Kravets told Crain's that the business was healthy and that he expected sales to rebound this year after falling in 2008.
Related story: Sheldon Good leader still sees '09 rebound
According to court documents, the largest creditor is New York-based Miller Advertising Agency, which is owed nearly $699,000.
Two Chicago law firms are among the creditors, Much Shelist Denenberg Ament & Rubenstein, owed nearly $75,000, and Varga Berger Ledsky Hayes & Casey, which is owed nearly $65,000.
Other Chicago-area creditors include Media Spiders USA LLC, owed $41,700; accounting firm Miller Cooper & Co. Ltd., owed $35,600, and W2 Design & Advertising, which is owed $23,000.
The Washington, D.C.-based Urban Land Institute, a research group, is owed $60,000.
Sheldon Good, Steven Good's father, is also listed as a creditor, with a trade debt in an unspecified amount.
The commercial real estate brokerage arm of Boston-based store liquidator Gordon Brothers Group LLC, which is now called DJM Realty LLC, is also listed as a creditor, with an unspecified claim.
Chicago attorney Joel Rothman, who is handling Steven Good's estate, declined to comment.
