2014 civil complaint naming nojay

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

____________________________________

:

In re: : CHAPTER 11

:

ETFF CORPORATION, et al. : BANKRUPTCY NOS. 12-19430(MDC)

: and 12-19431(MDC)

Debtors :

____________________________________: (Jointly Administered)

:

MorrisAnderson, Ltd., in its capacity :

as Trustee of the Plan Trust of :

ETFF Corporation, et al. :

:

Plaintiff : ADVERSARY NO. 14-

:

v. :

:

WELLSOURCE FACILITIES :

HOLDING, LLC f/k/a CARLISLE :

ADVISORS, LLC, :

:

RALPH W. BRIGGS, :

:

WILLIAM R. NOJAY, ESQUIRE, :

:

GARY S. OHLBAUM, :

:

and :

:

NOURICAN PORTFOLIO I LLC :

:

Defendants :

____________________________________:

COMPLAINT

Pursuant to 11 U.S.C. §§ 105(a), 363 and 510(c) and Rule 7001 of the Federal

Rules of Bankruptcy Procedure, MORRISANDERSON, LTD., in its capacity as Trustee of

the Plan Trust of ETFF Corporation, et al. (the “Trustee” and at times, the “Plaintiff”), by

and through its counsel, Gellert Scali Busenkell & Brown, LLC, hereby bring this Complaint

Case 14-00507-mdc Doc 1 Filed 10/02/14 Entered 10/02/14 16:59:12 Desc Main Document of 45

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against WELLSOURCE FACILITIES HOLDING, LLC f/k/a CARLISLE ADVISORS, LLC

(“Wellsource”); RALPH W. BRIGGS (“Mr. Briggs”); WILLIAM R. NOJAY, ESQUIRE

(“Mr. Nojay”); GARY S. OHLBAUM (“Mr. Ohlbaum”); and NOURICAN PORTFOLIO I

LLC (“Nourican,” collectively with Wellsource and Messrs. Briggs, Nojay and Ohlbaum, the

“Defendants”), and in support thereof, respectfully aver as follows:

JURISDICTION AND VENUE

1. This is an adversary proceeding commenced by the Debtors, pursuant to 11

U.S.C. §§ 105(a), 363 and 510(c) (the “Bankruptcy Code”) and Rule 7001 of the Federal Rules

of Bankruptcy Procedure (the “Bankruptcy Rules”).

2. This Honorable Court has jurisdiction over this adversary proceeding in

accordance with 28 U.S.C. §§ 157(b)(1) and 1334(b) and (e), and this matter arises in, under,

and is related to a pending bankruptcy case. This adversary proceeding is a core proceeding

under 28 U.S.C. §§ 157(b)(2)(A), (B), (D), (M), (N) and (O).

3. Venue is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409.

THE PARTIES

4. Debtor, ETFF Corporation (“ETFF”), was a Pennsylvania business corporation

with its principal offices located at 2260 Erin Court, Lancaster, Pennsylvania 17601-1965. Its

predecessor corporation, Pennfield, was founded in the spring of 1919. Over the years, the

company flourished and grew from a small grist-type feed mill into a diversified, multi-state

business.

5. Debtor, the ETFF Transport Company (the “Affiliated Debtor”), was a

Pennsylvania business corporation with its corporate offices located at 2260 Erin Court,

Lancaster, Pennsylvania 17601-1965. ETFF is the sole owner of one hundred (100%) percent


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of the equity interests in the Affiliated Debtor. The Affiliated Debtor entity was formed for the

sole purpose to own the tractors and trailers that are used in the distribution of feed for ETFF.

6. Plaintiff, the ETFF Plan Trustee, is the trustee of the ETFF Plan Trust which

was vested with title to all claims and causes of action previously held by the Debtor and

Affiliated Debtor by the terms of the Amended Joint Plan of Liquidation Proposed by Debtors-

in-Possession, dated June 13, 2014 (the “Plan”) and the order confirming the Plan (the

“Confirmation Order”) entered June 18, 2014. See Penn, Docket Entries No. 929 and 941. 1

7. Defendant, Wellsource, is a Pennsylvania limited liability company with a

registered office located at 7 East Harmon Drive, Carlisle, Pennsylvania 17015-7649. Upon

information and belief, Carlisle Advisors, LLC, was created on March 1, 2012, and has been

operating as Wellsource since December 2012.

8. Defendant, Mr. Briggs is the managing director and president of Wellsource.

Upon information and belief, Mr. Briggs’ home address is located at 7 East Harmon Drive,

Carlisle, Pennsylvania 17015-7649. Upon information and belief, Mr. Briggs holds a forty-

five percent interest in Wellsource.

9. Defendant, Mr. Nojay is an attorney formerly with the firm of Hiscock &

Barclay, LLP, in Rochester, New York. In addition, Mr. Nojay is a partner of Mr. Briggs in

Wellsource. Upon information and belief, Mr. Nojay’s home address is located at 37 Wood

Stone Rise, Pittsford, New York 14534-3668. Upon information and belief, Mr. Nojay holds a

forty percent interest in Wellsource.

10. Defendant, Mr. Ohlbaum is a managing member and agent of Nourican. Upon

information and belief, Mr. Ohlbaum’s home address is located at 15 Avery Road 15,

1 The record will be referred to herein by Pennfield’s bankruptcy case docket number as “Penn. Docket Entry

No[s]. ___” and/or the Affiliate’s bankruptcy case docket number as “PTC Docket Entry No[s]. ___.”


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Bloomfield, Connecticut 06002-4318.

11. Defendant, Nourican, is a foreign limited liability company with registered

offices located at 12 Crossroads Plaza, West Hartford, Connecticut 06137 and 160 Greentree

Drive Suite 101, Dover, Delaware 19904.

BACKGROUND

A. The Debtors’ Chapter 11 Cases

12. On October 3, 2012 (the “Petition Date”), ETFF and the Affiliated Debtor filed

separate Voluntary Petitions for Relief under Chapter 11 of the Bankruptcy Code in the Eastern

District of Pennsylvania. See, Penn. Docket Entry No. 1; PTC Docket Entry No. 1.

13. Since the Petition Date, the Debtors have continued in possession and

management of their business and property in accordance with 11 U.S.C. §§ 1107(a) and 1108.

14. Among the “first day” motions filed by the Debtors was a Motion for the entry

of an Order directing the joint administration of the Debtors’ Chapter 11 bankruptcy cases

pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure. See, Penn. Docket

Entry No. 7. Thereafter, in an Order dated October 10, 2012, the Bankruptcy Court granted the

Debtors’ joint administration requests. See, Penn. Docket Entry No. 70.

15. No Trustee or Bankruptcy Examiner has been appointed in these Chapter 11

bankruptcy cases pursuant to 11 U.S.C. § 1104(a) or (c).

16. Pursuant to 11 U.S.C. § 1102(a)(1), an official committee of unsecured creditors

has been appointed by the United States Trustee. See, Penn. Docket Entry No. 104.

17. On June 18, 2014, the Bankruptcy Court signed an Order approving the

Amended Joint Plan of Liquidation. See Penn. Docket Entry No. 941.


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18. On July 3, 2014, the Effective Date of the Plan occurred. See Penn. Docket

Entry No. 961. On the Effective Date, pursuant to the Plan, the Trustee was appointed. The

Trustee was granted the right under the Plan to pursue any avoidance claims or causes of action

that accrued to or were assertable by the Debtors.

B. The Business Operations of the Debtors

19. ETFF was a regional manufacturer of bulk and bagged feeds for dairy, equine

and other commercial and backyard livestock (the “Feed Business”). See, Declaration of

Arnold Sumner, at ¶ 14, a true and correct copy of which is attached hereto as Exhibit 1 and

made a part hereof. Approximately seventy-five (75%) percent of the tons of feed that were

sold in 2011 were to the dairy sector. Id. ETFF owned and operated three (3) production mills

located in Mount Joy, Martinsburg and South Montrose, Pennsylvania. Id.

20. These mills produced 194,000 tons of feed in 2011. See, Exhibit 1, at ¶ 14. The

strategy of ETFF was to produce complete and concentrate feeds for the animals of the

customers that they service. Id., at ¶ 17. ETFF formulates the feeds to meet the specific

nutritional needs of the animals in the different segments of their life cycle and/or milking

cycle. Id. ETFF delivers the feed directly to the farms of the customers or to the feed dealers.

Id. The feed was delivered in bulk or in bags, depending on the needs of each client. Id.

C. The Events Leading to Bankruptcy

21. ETFF’s unstable financial situation was due, among other reasons, to a

combination of long-term industry trends, short-term commodity volatility, and substantial


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outstanding liabilities. See, Exhibit 1, at ¶ 39. The dairy industry in Pennsylvania has been

slowly contracting as consumption declines and herd productivity increases. Id.

22. During the current contraction which began in 2007, combined with the loss of

several important customers, ETFF’s dairy volume declined and the company began a strategic

review of its business assets, which culminated in the sale of its foodservice assets in April

2011 and the Hempfield feed mill in April 2012. See, Exhibit 1, at ¶ 40.

23. ETFF implemented a plan in mid-2010 which included various cost reduction

strategies including a reduction in wages and personnel, reductions in marketing expenses,

elimination of the 401(k) match as well as leveraging ETFF’s logistics operations to reduce

costs and gain market share. See, Exhibit 1, at ¶ 41.

24. Furthermore, during the first half of 2012, ETFF implemented another cost

reduction plan, which included cutting corporate staff and closing the ETFF’s truck repair and

maintenance facility at Mount Joy. See, Exhibit 1, at ¶ 42.

25. ETFF’s financial position continued to deteriorate in June and July of 2012 as

commodity prices rapidly increased due to the drought in the Midwest, milk price declines, and

ETFF’s input prices rose accordingly. See, Exhibit 1, at ¶ 43. The combination of lower

volume, rising input costs, and lower milk prices placed additional strain on ETFF’s cash

management and its accounts payable continued to increase. Id.

D. The Factors Leading to the Sale of the Business

26. In June 2012, the Debtors began a strategic review of their operations and

considered a variety of strategic options to maximize value through strategic business

initiatives, capital restructurings and/or asset dispositions involving all or part of the Feed

Business. See, Exhibit 1, at ¶ 44. Facing declining liquidity, in July 2012, the Debtors decided


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to explore opportunities to sell the Feed Business as a whole or by individual mill or mill

combination. Id.

27. To assist in that task, the Debtors used the services of Lakeshore Food

Advisors, LLC (“Lakeshore”), in order to simultaneously pursue debt refinancing and to

manage the sales process for the Feed Business, both as a whole and in parts, to prospective

buyers. See, Exhibit 1, at ¶ 44. See also, Certification of Mary Burke, at ¶ 4, a true and correct

copy of which is attached hereto as Exhibit 2 and made a part hereof. Thereafter, Lakeshore

worked with the Debtors to develop a Confidential Information Memorandum (“CIM”) to

market the Business to potential lenders/buyers. See, Exhibit 2, at ¶ 5.

28. In seeking potential buyers for the Feed Business, Lakeshore initially identified

twenty-three (23) parties based on those companies’ strategic fit and financial characteristics

and contacted those parties to solicit interest in purchasing part or all of the Feed Business.

See, Exhibit 1, at ¶ 45. See also, Exhibit 2, at ¶ 7. Of those 23 contacted parties, more than

nine (9) potential buyers executed confidentiality agreements and received business and

financial information regarding the Feed Business and performance of the individual mills.

See, Exhibit 1, at ¶ 45. See also, Exhibit 2, at ¶ 8.

29. Following the receipt of initial letters of intent, the Debtors invited five (5)

potential buyers to management presentations between August 29, 2012 and September 4,

2012. See, Exhibit 1, at ¶ 45. See also, Exhibit 2, at ¶ 9. Four (4) of those potential buyers

were also given access to due diligence materials in a data room created by Lakeshore and

were provided with a draft asset purchase agreement. See, Exhibit 1, at ¶ 45. See also, Exhibit

2, at ¶ 10. The data room contained substantially all of the materials related to the Debtors’

business units necessary for those potential buyers to determine their ongoing interest in the

Feed Business. See, Exhibit 1, at ¶ 45.


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30. The Debtors, with the assistance of Lakeshore, continued to provide for the

organized and efficient transmission of the data related to the Feed Business to those interested

parties. See, Exhibit 1, at ¶ 46. Additionally, the Debtors coordinated various site visits to the

Debtors' offices and mills. Id. See also, Exhibit 2, at ¶ 11. All in all, these prospective bidders

have had extensive access to diligence materials and have assembled teams of business, legal

and financial advisors to properly assist them in determining their bids.

31. After several weeks of continuing diligence and marketing efforts, the Debtors

instructed prospective bidders to submit their final proposals no later than September 20, 2012,

which proposals were to include a mark-up of a form purchase agreement prepared by the

Debtors. See, Exhibit 1, at ¶ 47. See also, Exhibit 2, at ¶ 11. Two potential buyers submitted

marked-up asset purchase agreements for the purchase of all of the Feed Business and four

potential buyers submitted letters of intent for the purchase of an individual mill or mill

combination. See, Exhibit 1, at ¶ 47. See also, Exhibit 2, at ¶ 12.

32. The Debtors, in conjunction with Lakeshore, evaluated the terms and benefits of

each proposal, as well as the benefits of other alternatives. See, Exhibit 1, at ¶ 48. See also,

Exhibit 2, at ¶ 13. In addition to the financial terms of each proposal, the Debtors also

evaluated other factors including, but not limited to: (1) any conditions placed on the purchase

of the Feed Business (or portion thereof), such as due diligence contingencies; (2) the financial

wherewithal of the prospective buyer; (3) the proportion of the Feed Business to be purchased;

(4) the willingness of the prospective buyer to assume the Debtors’ obligations under its

Customer Programs; and (5) the continued employment of the Debtors’ employees. See,

Exhibit 1, at ¶ 48. See also, Exhibit 2, at ¶ 14.

33. Based upon these evaluations, the Debtors, in their business judgment,

concluded that the marked-up asset purchase agreement submitted by Wellsource offered


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advantageous terms and significant economic benefit to the Debtors with respect to the sale of

the Debtors' assets. See, Exhibit 1, at ¶ 49. See also, Exhibit 2, at ¶ 17. Thus, on September

22, 2012, Lakeshore approached Wellsource regarding the possibility of pursuing a sale

transaction through a bankruptcy pursuant to 11 U.S.C. § 363. See, Exhibit 2, at ¶ 15.

34. Wellsource indicated to Ms. Burke and the Debtors that the financing necessary

to consummate the sale would be received from Mr. Ohlbaum and Nourican.

35. Consequently, at a meeting held on September 28, 2012, the Debtors’ Board of

Directors authorized management to finalize negotiations with Wellsource as a “Stalking

Horse Bidder,” to finalize negotiations on a DIP Loan, and to file for Chapter 11 protection of

the Debtors’ assets while continuing to market and engage other interested buyers for the sale

of the assets under the provisions of the Bankruptcy Code. See, Exhibit 2, at ¶ 16.

E. Wellsource and Nourican

36. After ascertaining that Pennfield was for sale and while the solicitation process

was continuing, Mr. Briggs contacted Mr. Nojay and convinced him that the Feed Business

was a proper target for acquisition.

37. Upon information and belief, in September 2012, Mr. Briggs and Mr. Nojay

contacted Mr. Ohlbaum and met with him in New York City. Wellsource, its principals and

Mr. Ohlbaum soon thereafter entered into an agreement whereby Mr. Ohlbaum would create

Nourican and fund it with $217 million, of which $88 million would go to Wellsource to fund

the acquisition of several feed businesses, including, specifically, Wellsource (the “Nourican

Agreement”).

38. Although Mr. Ohlbaum was aware of the Wellsource Agreement, as defined

below, and that Wellsource and its principals were relying on funds provided under the


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Nourican Agremeement to consummate the same, none of the expected $88 million was

funded.

F. The Sale Motion

39. Based on the pre-petition solicitation process, on the date these Chapter 11

bankruptcy cases were filed, the Debtors entered into an Asset Purchase Agreement with

Wellsource for the sale of the Feed Business (the “Wellsource Agreement”). A true and

correct copy of the Wellsource Agreement is attached hereto as Exhibit 3 and made a part

hereof.

40. Accordingly, on October 5, 2012, the Debtors submitted a pleading styled

“Motion for Orders pursuant to 11 U.S.C. §§ 105(a), 363, 365 and 1146(c) and Fed. R. Bankr.

P. 2002, 6004, 6006 and 9014 (I) Approving Bidding Procedures and Break-Up Fee, (B) the

Form and Manner of Sale Notices and (II) Authorizing and Approving (A) the Sale of the

Debtors’ Interests in its Business and Mills and Associated Real Estate, Machinery,

Equipment, Fixtures and Personal Property Free and Clear of Liens, Claims and

Encumbrances, (B) the Assumption and Assignment of Certain Executory Contracts and

Unexpired Leases and (C) the Assumption of Certain Liabilities, (D) Granting Related relief

and Request for an Expedited Hearing, Limited Notice and Reduced Noticed Period” (the

“Sale Motion”) with accompanying Exhibits. See, Penn. Docket Entry No. 58, 127, 147-51.

41. Accompanying Exhibit “A” to the Sale Motion consisted of the proposed

Bidding Procedures to be employed with respect to the proposed sale of the Feed Business.

See, Penn. Docket Entry Nos. 58 and 147. Specifically, the proposed Bidding Procedures

described, inter alia, the assets available for sale, the manner in which bidders and bids became

qualified, the coordination of diligence efforts among bidders, the receipt and negotiation of


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bids received, the conduct of any subsequent auction, the ultimate selection of the successful

bidder(s) and the Court’s approval thereof. See, Penn. Docket Entry No. 147.

42. Accompanying Exhibit “B” to the sale Motion consisted of the Wellsource

Agreement between the Debtors and Wellsource. See, Exhibit 3. See also, Penn. Docket Entry

Nos. 58 and 127. Pursuant to the Wellsource Agreement, (a) the Debtors were to (i) sell the

“assets used in the [Feed] Business, free and clear of all” liens, claims, interests and

encumbrances and (ii) assume and assign the certain executory contracts and leases to the

purchaser and (b) the purchaser was to assume the “Assumed Liabilities” of the Debtors. See,

Exhibit 3, at pp. 1-4. The salient terms of the Wellsource Agreement are as follows:

Purchase Price. The “Purchase Price” for the assets shall be $15,600,000 minus

the “Adjustments.” “Adjustments” are (i) liabilities for “Acquired Leases”

relating to rolling stock, information technology, phone systems and computer

leases scheduled to expire on November 1, 2012; (ii) value of all inventory

which is not good, saleable condition, and payables tied to inventory (other than

customer prepayments or deposits to purchase feed in the Feed Business); (iii)

the amount that is equal to 15% of the accounts receivable arising out of the

operation of the Feed Business and listed on Schedule 1.1(g), and (iv) all

accounts payable attributable to acquired inventory. The purchaser is also

assuming certain liabilities as detailed in section 1.3 of the Agreement

including, but not limited to (a) all liabilities of seller for obligations relating to

the “Grain Bank” incurred in the Grain Business, up to a maximum of

$1,500,000 and (b) all liabilities relating to customer prepayments or deposits to

purchase feed in the Feed Business, up to a maximum amount of $600,000.

Assets Included. The proposed sale will include all the Debtors’ right, title and

interest in the assets except for the “Excluded Assets.”

Assumed Liabilities. The purchaser shall assume those liabilities relating to the

ownership, possession or use of the assets and the liabilities in connection with

the customer programs (related to the grain account program and customer

prepayments and deposits) including all of the obligations and liabilities arising

under the assumed contracts.

Closing. The closing shall occur immediately following the latest to occur of:

(i) approval of the proposed sale by the Bankruptcy Court; and (iii) as soon as

reasonably practicable after the conditions set forth in Article VIII of the

Agreement have been satisfied.


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Conditions to Closing. The Agreement is subject to approval by the Bankruptcy

Court and additional competitive bidding pursuant to the proposed Bidding

Procedures.

Representations and Warranties. The Agreement contains standard

representations and warranties.

See, Exhibit 3, at pp. 2-4, 6-12 and 15-16. See also, Penn. Docket Entry No. 58.

43. In an Order dated October 22, 2012 (the “Procedures Order”), the Bankruptcy

Court, inter alia, (i) approved the proposed Bidding Procedures proposed by the Debtors, (ii)

allowed a break-up fee in the amount of $400,000 to be paid to Wellsource in the event that a

higher and better bid was presented and accepted by the Debtors, and (iii) authorized the

Debtors to solicit bids for the sale of the Feed Business. See, Docket Entry No. 159. In

addition, the Procedures Order scheduled a hearing for November 28, 2012, to approve the

Debtors’ sale of the Feed Business to the successful bidder (the “Sale Hearing”). Id.

44. Thereafter, Lakeshore spoke with additional interested parties regarding the 11

U.S.C. § 363 sale process, and reengaged previously contacted parties to determine if there was

any renewed interest in submitting a bid to purchase the Feed Business of the Debtors. See,

Exhibit 2, at ¶ 18. Lakeshore also reached out via telephone and/or e-mails to fifty-nine (59)

additional strategic and financial parties. Id., at ¶ 19. At the same time, advertisements of the

sale auction were published in the Wall Street Journal Eastern distribution on October 29,

2012, and the October 29, 2012 issue of Feedstuffs Magazine. Id., at ¶ 19.

45. Pursuant to the Procedures Order entered by the Bankruptcy Court, the Bid

Deadline to submit bids was November 19, 2012. See, Penn. Docket Entry No. 159. See also,

Certification of Arnold Sumner, at ¶ 6, a true and correct copy of which is attached hereto as

Exhibit 4 and made a part hereof. Bids were initially submitted by other potential buyers, but

those bids were subsequently withdrawn and thus, no bid other than the one made by


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Wellsource was received by the Debtors by the requisite Bid Deadline date. See, e.g., Hearing

Transcript of November 28, 2012, a true and correct copy of which is attached hereto as

Exhibit 5 and made a part hereof, at p. 11. See also, Exhibit 2, at ¶ 22; Exhibit 4, at ¶ 6.

46. Wellsource’s bid was bolstered by a letter dated November 16, 2012 signed by

Mr. Ohlbaum which indicated that the full closing amount of $15,600,000 was on deposit at

Citibank, N.A. in New York, and a commitment for a financial guarantee from Vital Funds,

Inc. dated October 16, 2012 and provided by Mr. Ohlbaum.

47. Accordingly, on November 21, 2012, the Debtors filed a Notice with the

Bankruptcy Court of the bid results indicating, inter alia, that the Debtors intended to proceed

with the sale of the Feed Business pursuant to the terms of the Wellsource Agreement. See,

Exhibit 4, at ¶ 6. See also, Penn. Docket Entry No. 216.

G. The Sale Order

48. At the Sale Hearing before the Bankruptcy Court on November 28, 2012,

testimony was adduced from (i) Ms. Mary Burke, Lakeshore’s principal; (ii) Mr. Arnold

Sumner, the president and chief executive officer of the Debtors; and (iii) Mr. Briggs, the

substantial majority owner of Wellsource. See, Exhibit 5.

49. In his testimony, Mr. Briggs indicated that Wellsource was “prepared in every

way” to close on the purchase of the Feed Business under the terms of the Wellsource

Agreement as early as December 5, 2012 and that there was no reason why Wellsource would

not close on the agreed upon transaction. See, Exhibit 5, at pp. 20 and 22-23.

50. In addition, Mr. Briggs’ testimony also indicated that Wellsource had

“sufficient funds” to close on the purchase of the Feed Business and that there was “no going

back” on that obligation. See, Exhibit 5, at pp. 24-25.


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51. This being so, in an Order dated November 28, 2012 (the “Sale Order”), the

Bankruptcy Court, inter alia, approved and authorized the Wellsource Agreement. A true and

correct copy of the Sale Order is attached hereto as Exhibit 6 and made a part hereof.

52. Pursuant to the Sale Order, the Debtors were authorized and empowered by the

Bankruptcy Court to accept Wellsource’s offer upon such terms and conditions as were set

forth within the Wellsource Agreement and the record compiled at the Sale Hearing on

November 28, 2012. See, Exhibit 6, at pp. 5, 7, 10, 17, 19-20. See also, Exhibit 5.

53. Pursuant to the Sale Order, the Debtors were also authorized and empowered by

the Bankruptcy Court to execute any and all documents necessary to effectuate the sale agreed

upon within the Wellsource Agreement and to take all other actions as may be necessary to

release its liens on or claims against the Feed Business. See, Exhibit 6, at pp. 19-20.

H. The Closing on the Transfer of the Purchased Assets

54. After the entry of the Sale Order by the Bankruptcy Court on November 28,

2012, Wellsource and/or its principal, Mr. Briggs, delayed the initially scheduled closing date

on the purchase of the Feed Business of the Debtors to December 14, 2012.

55. On December 14, 2012, closing commenced and all the documents necessary to

transfer the Feed Business from the Debtors to Wellsource pursuant to the Wellsource

Agreement were fully executed and delivered (collectively, the “Transfer Documents”).

56. This being so, the sole condition remaining to conclude the closing was

Wellsource advancing the “Funds Needed to Close” (as hereinafter defined).

57. During the course of the closing, Wellsource and/or its principal, Mr. Briggs,

advised counsel for the Debtors, Aris J. Karalis, Esquire, that it was unable to deliver the cash

due from it in the amount of $13,523,488.17 (the “Funds Needed To Close”) as indicated on


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the HUD-1 (“cash from Borrower” (Item 301) of the Master HUD-1) in order to conclude the

closing. A true and correct copy of the Master HUD-1 with attachments is attached hereto as

Exhibit 7 and made a part hereof.

58. As a result, it was agreed on the evening of December 14, 2012, that Wellsource

would have until 12:00 P.M., Eastern Time, on December 18, 2012 (the “Initial Deadline”) to

wire the Funds Needed to Close to the Land Transfer Company (the “Title Company”).

59. Pursuant to the closing document escrow dated December 14, 2012, the parties

agreed that the Title Company would hold all the Transfer Documents as escrow agent until it

received the Funds Needed To Close, so that it could make the disbursements on the HUD-1s

and release the Transfer Documents. Otherwise, the Title Company was to destroy the

Transfer Documents.

60. Approximately a half-hour before the Initial Deadline, Wellsource and/or its

principal, Mr. Briggs, advised the Debtors’ counsel that the Funds Needed to Close had been

wired to CitiBank and Wellsource would provide written notification to the Debtors’ counsel

that the wire was sent and, based on this additional information, Wellsource and/or Mr. Briggs

requested that the Debtors extend the Initial Deadline to 4:00 P.M., Eastern Time, on

December 18, 2012 (the “Second Deadline”) to avoid the Transfer Documents being destroyed.

61. Based on these representations from Wellsource, Mr. Briggs and Mr. Ohlbaum,

and additional conditions imposed by the Debtors, the Debtors agreed to the Second Deadline.

62. Despite repeated representations that the Funds Needed to Close would arrive

before the Second Deadline, the funds were not received and Wellsource defaulted on its

obligations by failing to timely consummate the closing under the terms and conditions set

forth within the Wellsource Agreement approved and authorized by the Sale Order.


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I. The DIP Financing Orders

63. On October 4, 2012, the Debtors submitted a pleading styled “Motion of

Debtors for Entry of Interim and Final Orders (I) Authorizing Debtors to Obtain Secured

Postpetition Financing pursuant to §§ 105, 361, and 364(c) of the Bankruptcy Code and

Federal Rule of Bankruptcy Procedure 4001; (II) Scheduling an Interim Hearing and

Prescribing Form and Manner of Notice for the Final Hearing, and (III) Granting Related

Relief” (the “DIP Financing Motion”). See, Penn. Docket Entry No. 24.

64. As reflected in the DIP Financing Motion, in addition to entering into an asset

purchase agreement with the Debtors, Wellsource also agreed to provide the Debtors with $2

million ($2,000,000) of post-petition financing under a secured debtor-in-possession (“DIP”)

term loan facility. See, Penn. Docket Entry No. 24, DIP Financing Motion, at ¶¶ 19 and 21.

See also, Exhibit 1, at ¶¶ 49, 51, 81 and 84; Exhibit 5, at pp. 21-22.

65. This being so, in an Order dated October 10, 2012, the Bankruptcy Court

granted the relief requested in the DIP Financing Motion and authorized the Debtors to obtain

post-petition financing in the amount of $2 million ($2,000,000) from Wellsource pursuant to

the terms of a secured DIP term loan facility dated October 3, 2012 (hereinafter, the “DIP

Financing Facility”) on an interim basis (the “Interim Order”). A true and correct copy of the

Interim Order is attached hereto as Exhibit 8 and made a part hereof.

66. Thereafter, on November 8, 2012, the Bankruptcy Court entered a final order

(the “Final Order”) authorizing the Debtors to enter into and perform under the DIP Financing

Facility and to borrow under that Facility the aggregate principal amount of $2 million

($2,000,000) for the purposes set forth in the budget attached to the Final Order (the


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“Budget”). True and correct copies of the Final Order and the DIP Financing Facility are

attached hereto as Exhibits 9 and 10, respectively, and made a part hereof.

67. Despite repeated requests from the Debtors, Wellsource as the DIP lender

defaulted on its obligations by failing to make the remaining advances to the Debtors set forth

in the Budget, including the advance of the full balance of the $2 million ($2,000,000) under

the DIP Financing Facility, approved by the Interim and Final Orders entered by the Court.

J. The Notice of Default

68. As put forth in this Complaint, Wellsource is in default under the Wellsource

Agreement and the Sale Order. See, ¶¶ 30-33 , 39, 43, 45-60, supra. See also, Exhibit 3;

Exhibit 5, at pp. 20, 22-23 and 24-25; Exhibit 6; Exhibit 7.

69. As put forth in this Complaint, Wellsource is also in default of the DIP Facility,

the Interim Order and the Final Order. See, ¶¶ 61-65, supra. See also, Exhibit 1, at ¶¶ 49, 51,

81 and 84; Exhibit 5, at pp. 21-22; Penn. Docket Entry Nos. 24, 89 and 191.

70. Accordingly, on December 19, 2012, the Debtors served Wellsource with a

notice of default (the “Default Notice”) under the Wellsource Agreement, the Sale Order, the

DIP Facility, the Interim Order and the Final Order. A true and correct copy of the Default

Notice is attached hereto as Exhibit 11 and made a part hereof.

K. Events Subsequent to the Default

71. Following Wellsource’s default, the Debtors restarted the sales process. On

December 28, 2012 the Debtors entered into an Asset Purchase Agreement with Cargill,

Incorporated to purchase a portion of the Feed Business for a purchase price of $8,500,000

(“Cargill Sale”).


18

72. Debtors filed a motion for approval of the Cargill Sale on December 28, 2012

and an order approving the same was granted on January 18, 2013. See, Penn Docket Entries

No. 290 & 337. The Cargill Sale was consummated.

73. The Debtors and professionals employed by the Debtors expended

significant time and resources in arranging and consummating the Cargill Sale.

74. On January 17, 2013, the Debtors entered into an agreement with John J.

Hoober, Inc. for a second portion of the assets which the Defendants were to have purchased

(Hoober Sale) at a price of $105,000.00. The Hoober Sale was approved and consummated.

See, Penn Docket Entries No. 345 & 347.

75. The Debtors and professionals employed by the Debtors expended significant

time and resources in arranging and consummating the Hoober Sale.

76. A final portion of the Feed Business as sold to K&M Ag, LLC pursuant to an

agreement dated January 17, 2013 and approved by the Court on January 28, 2013 (K&M

Sale). See, Penn Docket Entries No. 362 & 370. The sales price was $245,000.

77. The Debtors and professionals employed by the Debtors expended significant

time and resources in arranging and consummating the K&M Sale.

COUNT I

THE TRUSTEE v. DEFENDANTS WELLSOURCE, MR. BRIGGS

AND MR. NOJAY

PIERCING THE CORPORATE VEIL

78. The averments set forth in paragraphs 1 through 75 above are incorporated

herein, as if fully set forth at length.


19

79. In Pennsylvania, a corporation is “normally regarded as a legal entity separate

and distinct from its shareholders” and thus, “there is a strong presumption . . . against piercing

the corporate veil.” See, Deron v. SG Printing, Inc., 2012 U.S. Dist. LEXIS 125196, at *27-

*28 (M.D. Pa. Sept. 4, 2012) quoting Ashley v. Ashley, 482 Pa. 228, 237, 393 A.2d 637, 641

(1978) citing in turn Barium Steel Corp. v. Wiley, 379 Pa. 38, 47, 108 A.2d 336, 341 (1954).

The same presumption applies for members of a limited liability company. See, In re Kitchin,

445 B.R. 472, 481 (Bankr. E.D. Pa. 2010). See also, Comment to 15 Pa. C.S.A. § 8904(b).

80. At the same time, whenever one in control of a corporate entity “uses that

control, or uses the corporate assets, to further his or her own personal interests, the fiction of

the separate corporate identity may properly be disregarded” and the corporate veil of that

entity may be effectively pierced. See, Morelia Consultants, LLC v. RCMP Enters., LLC,

2011 U.S. Dist. LEXIS 101793, at *24 (M.D. Pa. Sept. 9, 2011) quoting Ashley, supra, 482 Pa.

at 237, 393 A.2d at 641 citing in turn College Watercolor Group, Inc. v. William H. Newbauer,

Inc., 468 Pa. 103, 117, 360 A.2d 200, 207 (1976).

81. There is no clear test or well-settled rule in Pennsylvania regarding when a

Court may pierce the corporate veil. Nonetheless, the Third Circuit has set out a non-

exhaustive list of factors to determine whether it is appropriate to pierce the corporate veil:

. . . gross undercapitalization, failure to observe corporate formalities,

nonpayment of dividends, insolvency of debtor corporation, siphoning of

funds from the debtor corporation by the dominant stockholder,

nonfunctioning of officers and directors, absence of corporate records, and

whether the corporation is merely a facade for the operations of the

dominant stockholder . . .

See, ASD Specialty Healthcare Inc. v. New Life Home Care Inc., 2011 U.S. Dist. LEXIS

136819, at *10-*11 (M.D. Pa. Nov. 29, 2011) quoting Pearson v. Component Tech. Corp., 247

F.3d 471, 484-85 (3rd Cir. 2001), cert. denied, 534 U.S. 950, 122 S.Ct. 345, 151 L.Ed.2d 261


20

(2001). See also, Morelia Consultants, LLC, supra, 2011 U.S. Dist. LEXIS 101793, at *25

citing Commonwealth, Dep’t of Environmental Resources v. Peggs Run Coal Co., 55 Pa.

Commw. 312, 319, 423 A.2d 765, 769 (1980) (identifying some of the factors listed above and

noting that “Courts in Pennsylvania have found allegations of ‘failure to adhere to corporate

formalities, substantial intertwining of personal and corporate affairs, undercapitalization,

and the furthering of personal interests’ sufficient to pierce the corporate veil”); Partners

Coffee Co., LLC v. Oceana Servs. & Prods. Co., 700 F. Supp. 2d 720, 736 (W.D. Pa. 2010)

(identifying some of the factors listed above and noting that “Pennsylvania courts have found

that the veil of an LLC may be pierced to the same degree as that of a corporation”).

82. At all times relevant hereto, Messrs. Briggs and Nojay were members of

Wellsource. Mr. Briggs is the managing director and president of Wellsource. See, ¶ 7, supra.

Mr. Nojay, on the other hand, is a partner of Mr. Briggs in Wellsource. See, ¶ 8, supra.

83. As put forth in this Complaint, Carlisle Advisors, LLC, was created on

March 1, 2012, and has been operating as Wellsource since December 2012. See, ¶ 6, supra.

The significance behind this statement lies in the fact that, once this limited liability company

was created, there was a total failure to observe any limited liability company formalities by

Wellsource and/or Mr. Briggs. That is:

(a) The record reflects that there were no company records issued by

Wellsource;

(b) The record reflects that no owners’, members’, or shareholders’ meetings

were held by Wellsource;

(c) The record reflects that Mr. Briggs maintained the books and business

records for Wellsource.


21

All in all, Mr. Briggs, or, in the alternative, Mr. Nojay, dominated and controlled the activities

and business decisions of Wellsource and thus, he operated the company for his own exclusive

benefit.

84. At the same time, it is important to note that at all times relevant hereto,

Wellsource was and, upon information and belief, remains undercapitalized.

85. The undercapitalization of Wellsource is evidenced by the fact that the

company lacked the financial wherewithal to complete the sale ultimately approved by the

Bankruptcy Court in the Sale Order and acquire the Feed Business. See, Exhibit 5, at pp. 22-

23, 24-25. See also, ¶¶ 60, supra. Specifically, Wellsource, through its principals, Mr. Briggs

and Mr. Nojay, never provided the Funds Needed To Close and utilized subterfuges, delays

and inaction to evade the company’s obligations under the Wellsource Agreement and/or the

Sale Order approving and authorizing the same. See, ¶¶ 52-60, supra; Exhibit 1.

86. The undercapitalization of Wellsource is also evidenced by the fact that the

company lacked the financial wherewithal to fund the DIP Financing Facility authorized by the

Interim and Final Orders entered by the Bankruptcy Court. See, e.g., Exhibit 8; Exhibit 9 and

Exhibit “10”. To that effect, Wellsource, through its principals, Mr. Briggs and Mr. Nojay,

never advanced to the Debtors all the monies contemplated in the Budget, despite repeated

requests from the Debtors. See, ¶¶ 62-65, supra; Exhibit 1.

87. The undercapitalization of Wellsource is further evidenced by the fact that Mr.

Briggs, and Mr. Nojay would personally pay certain obligations of Wellsource, or cause

Wellsource to be funded only to the limited extent that it was able to pay certain limited

obligations as they became due. In short, at no time was Wellsource capitalized or funded to

the extent sufficient for it to operate as a separate and distinct going concern and without Mr.


22

Briggs’ ongoing, direct and constant oversight, control and domination of nearly every

decision made.

88. This being so, in this Adversary Proceeding, the limited liability company

form of Wellsource should be disregarded and the corporate veil pierced because:

(a) Mr. Briggs and Mr. Nojay, used Wellsource to induce and perpetrate a

fraud upon the Debtors as described herein. See, Counts IV, V and IX,

infra;

(b) Mr. Briggs and Mr. Nojay, used Wellsource to misrepresent information

upon the Debtors as described herein. See, Counts IV, VI and IX, infra;

(c) Mr. Briggs used Wellsource to interfere with prospective contractual

relations of the Debtors as described herein. See, Count VII, infra;

(d) Mr. Briggs, and Mr. Nojay caused Wellsource to be undercapitalized.

See, ¶¶ 82-85, supra;

(e) Mr. Briggs, and Mr. Nojay failed to observe corporate formalities

respecting Wellsource. See, ¶ 81, supra.

In short, Wellsource was and is dominated by Mr. Briggs and Mr. Nojay to the extent that

Wellsource is merely their alter ego.

89. In this Adversary Proceeding, it is appropriate to pierce the corporate veil of

Wellsource because recognition of the corporate fiction would lead to an unjust result, namely

shielding certain Defendants from the personal liability that should result from the fraudulent,

unlawful and tortious conduct described herein.

WHEREFORE, the Trustee respectfully demands judgment in its favor and

against Defendants Wellsource, Mr. Briggs and Mr. Nojay, together with their attorneys’ fees

and costs and for such other and further relief as this Honorable Court deems just and

appropriate.


23

COUNT II

THE TRUSTEE v. DEFENDANTS WELLSOURCE, MR. BRIGGS AND MR. NOJAY

BREACH OF CONTRACT (THE WELLSOURCE AGREEMENT)



91. The Wellsource Agreement is a valid and binding contract between the Debtors

and Wellsource. See, Exhibit 3. See also, Exhibit 6, at pp. 5, 7, 9-10 and 21.

92. The Sale Order approving and authorizing the Wellsource Agreement

constitutes a binding and enforceable obligation. See, Exhibit 6, at p. 21. See also, In re

Winston Inn & Restaurant Corp., 120 B.R. 631, 634-35 (E.D.N.Y. 1990) (finding that “a

successful bidder at a § 363 judicial sale [is] bound by a bankruptcy court’s order authorizing

or confirming the sale”); In re Rosecrest Enterprises, Inc., 80 B.R. 354, 356 (Bankr. W.D. Pa.

1987) (finding that the Bankruptcy Court’s sale Order “is controlling upon the parties” and

purchaser “is bound by the language” of that Order); In re Mann, 45 B.R. 755, 758 (Bankr.

S.D. Ohio 1985) (finding that a sale lawfully ordered, duly conducted and confirmed by

Bankruptcy Court Orders is binding on defaulting purchaser).

93. Pursuant to the Wellsource Agreement and/or the Sale Order approving and

authorizing the same, the cash purchase price to be paid to the Debtors at closing totaled

$13,523,488.17 (i.e., the Funds Needed to Close”). See, Exhibit 6, at p. 11. See also, Exhibit

3, at p. 6; Exhibit 1, at p. 2.

94. Pursuant to the Wellsource Agreement and/or the Sale Order approving and

authorizing the same, there was no doubt that the Debtors had limited resources with which to

continue to manage and operate their businesses. See, Exhibit 6, at p. 6. See also, ¶¶ 22 and

23, supra. Therefore, the prompt consummation of the sale of the Feed Business, as provided


24

for in the Wellsource Agreement and/or the Sale Order, was essential to the economic interests

of the Debtors. See, Exhibit 5, at p. 20. See also, Exhibit 6, at p. 6.

95. The Debtors performed their obligations under the Wellsource Agreement

and/or the Sale Order approving and authorizing the same by, among other things, taking all

actions necessary to effectively consummate the sale of the Feed Business. See, Exhibit 8, at

p. 1; Exhibit 1, at p. 1. See also, ¶ 53, supra.

96. Wellsource and/or its principals, Mr. Briggs and Mr. Nojay, materially breached

their obligations under the Wellsource Agreement and/or the Sale Order approving and

authorizing the same by, among other things, not providing the requisite Funds Needed to

Close on the sale of the purchased assets. See, Exhibit 8, at p. 2; Exhibit 1, at p. 2. See also,

¶¶ 54-60, supra. Specifically, by not providing the requisite Funds Needed to Close,

Wellsource and/or its principals, Mr. Briggs and Mr. Nojay, failed to consummate the sale

contemplated by the Wellsource Agreement and/or the Bankruptcy Court Order approving and

authorizing the same. See, Exhibit 8, at p. 2. See also, Exhibit 1, at p. 2.

97. In so breaching, Wellsource, and/or its principals, Mr. Briggs and Mr. Nojay,

not only have arbitrarily and unreasonably engaged in conduct which has impeded and derailed

the Debtors’ ability to promptly consummate the sale of the purchased assets, but has caused

substantial monetary damages to the Debtors.


against Defendants Wellsource and Mr. Briggs in the amount of no less than $6,750,000,

which represents the difference between the sales price under the Wellsource Agreement and

sales price under the Hoober, K&M and Cargill Sales, plus incidental costs associated with

consummating the Hoober, K&M and Cargill Sales together with their attorneys’ fees and

costs and for such other and further relief as this Honorable Court deems just and appropriate.


25

COUNT III

THE TRUSTEE v. DEFENDANTS WELLSOURCE, AND MR. BRIGGS

BREACH OF THE DUTY OF GOOD FAITH AND FAIR DEALING



99. The Wellsource Agreement is a valid and binding contract between the Debtors

and Wellsource. See, Exhibit 3. See also, Exhibit 6, at pp. 5, 7, 9-10 and 21.

100. The Sale Order approving and authorizing the Wellsource Agreement

constitutes a binding and enforceable obligation. See, Exhibit 6, at p. 21. See also, Winston

Inn, supra, 120 B.R. at 634-35 (finding that “a successful bidder at a § 363 judicial sale [is]

bound by a bankruptcy court’s order authorizing or confirming the sale”); Rosecrest

Enterprises, supra, 80 B.R. at 356 (finding that the Bankruptcy Court’s sale Order “is

controlling upon the parties” and purchaser “is bound by the language” of that Order); Mann,

supra, 45 B.R. at 758 (finding that a sale lawfully ordered, duly conducted and confirmed by

Bankruptcy Court Orders is binding on defaulting purchaser).

101. There is implied in every contract a duty of good faith and fair dealing that

neither party will do anything to deprive the other of the fruits of the contract. See, Clark

Motor Co. v. Mfrs. & Traders Trust, Co., 2007 U.S. Dist. LEXIS 54314, at *15 (M.D. Pa. July

26, 2007) citing Bedrock Stone & Stuff, Inc. v. Mfrs. & Traders Trust Co., 2005 U.S. Dist.

LEXIS 10218, at *18 (E.D. Pa. May 25, 2005) citing in turn Donahue v. Federal Express

Corp., 753 A.2d 238, 241, 2000 Pa. Super. LEXIS 663, at *7 (Pa. Super. Ct. May 9, 2000).

102. The Wellsource Agreement approved and authorized by the Sale Order

contained said implied duty of good faith and fair dealing, as a matter of law.


26

103. Wellsource is a party to the Wellsource Agreement approved and authorized by

the Sale Order and thus, it has a duty of good faith and fair dealing and has made an implied

covenant to act reasonably to fulfill that Agreement approved and authorized by the Court.

104. Wellsource and/or its principal, Mr. Briggs, breached their duty of good faith

and fair dealing by, among other things, failing to advance the Funds Needed to Close when all

conditions precedent to the closing had been satisfied under the Wellsource Agreement

approved and authorized by the Sale Order. See, e.g., Exhibit 1, at pp. 1-2. See also, ¶¶ 54-60,

supra.

105. By failing to act in accordance with the terms of the Wellsource Agreement

approved and authorized by the Sale Order, Wellsource and/or its principal, Mr. Briggs, not

only have deprived the Debtors of the fruits of the contract, but have caused substantial

monetary damages to the Debtors. Said actions on the part of Wellsource and/or Mr. Briggs

constitute breaches of the implied covenant of good faith and fair dealing.

106. Wellsource’s and/or Mr. Briggs’ breaches of the implied covenant of good faith

and fair dealing entitle the Debtors to damages caused by them, as well as punitive damages.


against Defendants Wellsource and Mr. Briggs, in the amount of no less than $6,750,000,



consummating the Hoober, K&M and Cargill Sales, together with its attorneys’ fees and costs

and for such other and further relief as this Honorable Court deems just and appropriate.


27

COUNT IV

THE TRUSTEE v. DEFENDANTS WELLSOURCE AND MR. BRIGGS

FRAUDULENT INDUCEMENT



108. In Pennsylvania, the elements of a claim for fraudulent inducement are: (i) a

representation; (ii) which is material to the transaction at hand; (iii) made falsely, with

knowledge of its falsity or recklessness as to whether it is true or false; (iv) with the intent of

misleading another into relying on it; (v) justifiable reliance on the misrepresentation; and (vi)

the resulting injury was proximately caused by the reliance. See, e.g., Atlantic Circulation, Inc.

v. Midwest Circulations, LLC, 2012 U.S. Dist. LEXIS 166128, at *38 (M.D. Pa. Nov. 20,

2012) citing Eigen v. Textron Lycoming Reciprocating Engine Div., 874 A.2d 1179, 1185,

2005 Pa. Super. LEXIS 901, at *13 (Pa. Super. Ct. April 20, 2005) quoting in turn Bortz v.

Noon, 556 Pa. 489, 499, 729 A.2d 555, 560 (1999).

109. This being so, under Pennsylvania law, inducing another to enter into a contract

by means of fraud or a material misrepresentation, when the other party was under no duty to

enter into the contract, is a key element of a claim for fraudulent inducement. See, In re

Allegheny Int’l, Inc., 954 F.2d 167, 178 (3rd Cir. 1992) citing College Watercolor Group, Inc.

v. William H. Newbauer, Inc., 468 Pa. 103, 115, 360 A.2d 200, 206 (1976) quoting in turn

RESTATEMENT OF CONTRACTS § 476 (1932).

110. As put forth in this Complaint, Wellsource, and/or its principal, Mr. Briggs,

misrepresented material facts relating to the purchase of the Feed Business. Specifically,

Wellsource and/or its principal, Mr. Briggs, falsely represented to the Debtors and other


28

parties-in-interest that Wellsource was prepared to purchase all of the Feed Business of the

Debtors. See, Exhibit 1, at ¶ 47; Exhibit 2, at ¶ 12. See also, ¶ 28, supra.

111. In addition, Wellsource and/or its principal, Mr. Briggs, misrepresented material

facts relating to Wellsource’s financial ability to purchase the Feed Business. In particular,

Wellsource and/or Mr. Briggs, falsely represented to the Debtors and other parties-in-interest

that Wellsource possessed the financial wherewithal to fund the purchase of all of the Feed

Business of the Debtors. See, Exhibit 5, at pp. 22-23, 24-25. See also, ¶¶ 47-48, supra.

112. Moreover, these false representations were material in that the representations

by Wellsource and/or its principal, Mr. Briggs, that Wellsource had adequate financial backing

from others to successfully purchase all of the Feed Business prevented the Debtors in their

diligence efforts from selecting other marked-up asset purchase agreements and/or letters of

intent submitted by other potential buyers. That is, the Debtors’ Board of Directors would not

have authorized management to finalize negotiations with Wellsource had management known

that, despite Wellsource’s and/or Mr. Briggs’ representations to the contrary, Wellsource was

undercapitalized and lacked the financial support necessary to adequately fund the purchase of

the Feed Business. See, ¶¶ 29-31 and 47-48, supra. See also, Partners Coffee Co., LLC v.

Oceana Servs. & Prods. Co., 700 F. Supp. 2d 720, 728-29 (W.D. Pa. 2010) citing Blumenstock

v. Gibson, 811 A.2d 1029, 1036, 2002 Pa. Super. LEXIS 3212, at *14-*15 (Pa. Super. Ct. Oct.

31, 2002) (finding that fraud in the inducement occurs when a party contends it would not have

entered into the agreement “but for” the fraudulent statements made by the other).

113. In like manner, even though Wellsource and/or Mr. Briggs knew that these

representations regarding the purchase of the Feed Business and the adequacy of funds to

complete said transaction were false, Wellsource and/or Mr. Briggs nonetheless continued to

make these misrepresentations to induce the Debtors to enter into the Wellsource Agreement


29

and ultimately reject other marked-up asset purchase agreements and/or letters of intent

submitted by other potential buyers. Indeed, at the Sale Hearing before the Court, Mr. Briggs

not only assured the Debtors and other parties-in-interest that Wellsource would have sufficient

funds to close at the initially scheduled December closing date, but that he and Wellsource

would have those funds as early as November 29, 2012. See, Exhibit 5, at p. 24.

114. This being so, the Debtors justifiably relied upon Wellsource and/or Mr.

Briggs’ misrepresentations and after evaluating each marked-up asset purchase agreement

received, concluded that the marked-up asset purchase agreement submitted by Wellsource

offered advantageous terms and significant economic benefits in the form of the highest

possible purchase price for the Feed Business. See, Exhibit 1, at ¶¶ 47-49; Exhibit 2, at ¶¶ 11-

17; Exhibit 6, at p. 20. See also, ¶¶ 28-31, supra. Had the Debtors known that Wellsource

and/or Mr. Briggs lacked the financial support necessary to close on the purchase of the Feed

Business, the Debtors would have selected other marked-up asset purchase agreements and/or

letters of intent submitted by other potential buyers and sell their business.

115. As a result of this justifiable reliance, the Debtors have suffered damages

separate and apart from the damages incurred due to Wellsource’s breach of the Wellsource

Agreement and/or the Sale Order approving and authorizing the same.

116. Furthermore, since the acts incurred by Wellsource and/or its principal, Mr.

Briggs, were oppressive, malicious and committed with conscious indifference to the rights of

the Debtors, the Debtors are entitled to and seek to recover punitive damages.


against Defendants Wellsource, and Mr. Briggs, in the amount of no less than $6,750,000,




30

consummating the Hoober, K&M and Cargill Sales, together with its attorneys’ fees and costs

and for such other and further relief as this Honorable Court deems just and appropriate.

COUNT V


COMMON LAW FRAUD

117. The averments set forth in paragraphs 1 through 114 above are

incorporated herein, as if fully set forth at length.

118. In Pennsylvania, the elements of a common law fraud action are: (i) a

misrepresentation; (ii) material to the transaction; (iii) made falsely; (iv) with the intent of

misleading another to rely on it; (v) justifiable reliance resulted; and (vi) injury was

proximately caused by reliance. See, e.g., Mason v. Threshman, 2012 U.S. Dist. LEXIS

121093, at *11 (M.D. Pa. Aug. 27, 2012) quoting Viguers v. Philip Morris USA, Inc., 837

A.2d 534, 540, 2003 Pa. Super. LEXIS 4099, at *13 (Pa. Super. Ct. Nov. 24, 2003), allocatur

granted by, 579 Pa. 705, 857 A.2d 680 (2004), aff’d by, 584 Pa. 120, 881 A.2d 1262 (2005)

citing in turn Debbs v. Chrysler Corp., 810 A.2d 137, 155, 2002 Pa. Super. LEXIS 3196, at

*44 (Pa. Super. Ct. Oct. 24, 2002), allocatur denied by, 574 Pa. 744, 829 A.2d 311 (2003).

119. Wellsource and/or its principal, Mr. Briggs, misrepresented material facts

relating to the closing on the transfer of the purchased assets. In particular, Wellsource and/or

Mr. Briggs, misrepresented to this Honorable Court, the Debtors and other parties-in-interest

that Wellsource and/or its principal, Mr. Briggs, intended to complete the sale ultimately

approved by the Bankruptcy Court in the Sale Order and acquire the purchased assets. See,

Exhibit 5, at pp. 22-23, 24-25. See also, ¶¶ 447-48, supra.


31

120. At the same time, Wellsource and/or Mr. Briggs’ misrepresentations were

material in that the terms specifically presented by them in the proposed asset purchase

agreement, prevented the Debtors in their diligence efforts from selecting other marked-up

asset purchase agreements and/or letters of intent submitted by other potential buyers.

121. In like manner, even though Wellsource and/or Mr. Briggs knew that these

representations regarding the Funds Needed to Close and the originally scheduled closing date

were false, Wellsource and/or Mr. Briggs nonetheless continued to make these

misrepresentations with the intent to prevent the Debtors from selecting other marked-up asset

purchase agreements and/or letters of intent submitted by other potential buyers. Indeed, at the

Sale Hearing, Mr. Briggs not only assured the Debtors and other parties-in-interest that he

would have sufficient funds to close at the originally scheduled December closing date, but that

he would have those funds as early as November 29, 2012. See, Exhibit 5, at p. 24.


Briggs’ misrepresentations. Had the Debtors known that Wellsource and/or Mr. Briggs did not

intend to close on the sale of the purchased assets, the Debtors would have selected other

marked-up asset purchase agreements and/or letters of intent submitted by other potential

buyers.

123. As a result of this justifiable reliance, the Debtors have suffered damages

separate and apart from the damages incurred due to Wellsource’s breach of the Wellsource

Agreement and/or the Sale Order approving and authorizing the same.

124. Furthermore, since the acts incurred by Wellsource and/or its principal,

Mr. Briggs, were oppressive, malicious and committed with conscious indifference to the

rights of the Debtors, the Debtors are entitled to and seek to recover punitive damages.


32


against Defendants Wellsource and Mr. Briggs, in the amount of no less than $6,750,000,



consummating the Hoober, K&M and Cargill Sales, plus punitive damages, together with its

attorneys’ fees and costs and for such other and further relief as this Honorable Court deems

just and appropriate.

COUNT VI

THE TRUSTEE v. DEFENDANTS WELLSOURCE, MR. BRIGGS, MR. OHLBAUM

AND NOURICAN

NEGLIGENT MISREPRESENTATION



126. In Pennsylvania, a claim of negligent misrepresentation requires: (i) a

misrepresentation of a material fact; (ii) that the representor either knew of the

misrepresentation, made the misrepresentation without knowledge as to its truth or falsity, or

made the representation under circumstances in which he or she ought to have known of its

falsity; (iii) that the representor intended the representation to induce another to act on it; and

(iv) that injury resulted to the party acting in justifiable reliance on the misrepresentation. See,

e.g., Clark Motor Co., supra, 2007 U.S. Dist. LEXIS 54314, at *18-*19 citing Gibbs v. Ernst,

538 Pa. 193, 210, 647 A.2d 882, 890 (1994).

127. Wellsource and/or its principals, Mr. Briggs, misrepresented material

facts relating to Wellsource’s financial ability to close on the transfer of the purchased assets.


33

In particular, as reflected in a bank letter, Wellsource and/or Mr. Briggs misrepresented their

financial wherewithal to complete the contemplated transaction. See, Exhibit 5, at p. 18.

128. Mr. Ohlbaum and/or Nourican misrepresented material facts relating to

Wellsource’s financial ability to close on the transfer of the purchased assets.

129. At the same time, Wellsource and/or its principal, Mr. Briggs,

misrepresented material facts relating to the closing on the transfer of the purchased assets.

Specifically, as reflected at the Sale Hearing, Wellsource and/or Mr. Briggs, misrepresented to

the Debtors that Wellsource and/or its principal, Mr. Briggs, intended to complete the sale

ultimately approved by the Bankruptcy Court in the Sale Order and acquire the purchased

assets. See, Exhibit 5, at pp. 22-23, 24-25. See also, ¶¶ 47-48, supra.

130. This being so, Wellsource and/or its principal, Mr. Briggs supplied false

information for the guidance of others in their business transactions and in so doing, failed to

exercise reasonable care or competence in obtaining or communicating the information.

131. As reflected in the testimony provided by Mr. Arnold Sumner at the Sale

Hearing, the Debtors justifiably relied on the false information provided to them by Wellsource

and/or its principal, Mr. Briggs. See, Exhibit 5, at pp. 16 and 18.

132. As a direct result of the Defendants’ negligent misrepresentation, and the

Debtors’ justifiable reliance thereon, the Debtors have suffered significant damages.


against Defendants Wellsource, Mr. Briggs, Mr. Ohlbaum and Nourican in the amount of no

less than $6,750,000, which represents the difference between the sales price under the

Wellsource Agreement and sales price under the Hoober, K&M and Cargill Sales, plus

incidental costs associated with consummating the Hoober, K&M and Cargill Sales, together


34

with its attorneys’ fees and costs and for such other and further relief as this Honorable Court

deems just and appropriate.

COUNT VII

THE TRUSTEE v. DEFENDANTS WELLSOURCE, MR. BRIGGS, MR. OHLBAUM

AND NOURICAN

INTENTIONAL INTERFERENCE WITH PROSPECTIVE

CONTRACTUAL RELATIONS



134. In Pennsylvania, the elements of a cause of action for intentional

interference with a contractual relation, whether existing or prospective, are: (i) the existence

of a contractual, or prospective contractual relation between the complainant and a third party;

(ii) a purposeful action on the part of the defendant, specifically intended to harm the existing

relation, or to prevent a prospective relation from occurring; (iii) the absence of privilege or

justification on the part of the defendant; and (iv) the occasioning of actual legal damage as a

result of the defendant’s conduct. See, e.g., Remick v. Manfredy, 238 F.3d 248, 263 (3rd Cir.

2001) citing Pelagatti v. Cohen, 370 Pa. Super. 422, 434, 536 A.2d 1337, 1343 (1987),

allocatur denied by, 519 Pa. 667, 548 A.2d 256 (1988) citing in turn Thompson Coal Co. v.

Pike Coal Co., 488 Pa. 198, 208, 412 A.2d 466, 471 (1979).

135. In September 2012, two (2) potential buyers submitted marked-up asset

purchase agreements for the purchase of all of the Feed Business and four (4) potential buyers

submitted letters of intent for the purchase of an individual mill or mill combination. See, e.g.,

Exhibit 1, at ¶ 47; Exhibit 2, at ¶ 12. See also, ¶ 28, supra.


35

136. Each of these proposals was competitive with the marked-up asset purchase

agreement submitted by Wellsource. Accordingly, the Debtors evaluated the terms and

benefits of each proposal, as well as the benefits of other alternatives. See, e.g., Exhibit 1, at ¶

48; Exhibit 2, at ¶ 13. See also, ¶ 29, supra.

137. Wellsource and/or its principal, Mr. Briggs, had knowledge of these

potential buyers and of the Debtors’ expectations of entering into a contractual relationship

with any one of them. Specifically, the Defendants were fully aware of the existence of these

prospective contractual relations between the Debtors and others.

138. At all relevant times herein, Wellsource, its principal, Mr. Briggs, Mr.

Ohlbaum and/or Nourican, misrepresented material facts relating to Wellsource’s financial

ability to purchase the Feed Business. In particular, Wellsource and/or Mr. Briggs, falsely

represented to the Debtors and other parties-in-interest that Wellsource possessed the financial

wherewithal to fund the purchase of all of the Feed Business of the Debtors and ultimately

close on the transfer of the purchased assets. See, Exhibit 5, at pp. 22-23, 24-25. See also, ¶¶

47-48, supra.

139. These false representations were material in that the representations by

Wellsource, its principal, Mr. Briggs, Mr. Ohlbaum and/or Nourican, that Wellsource had

adequate financial backing from others to successfully purchase all of the Feed Business

prevented the Debtors in their diligence efforts from selecting other marked-up asset purchase

agreements and/or letters of intent submitted by other potential buyers. Specifically, the record

reflects that the Debtors would have selected another potential buyer proposal over the marked-

up asset purchase agreement submitted by Wellsource, but for the intentional interference on

the part of Wellsource and/or its principal, Mr. Briggs, the Debtors failed to do so.


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140. Worse yet, this misrepresentation on the part of Wellsource, its principal,

Mr. Briggs, Mr. Ohlbaum and/or Nourican induced other potential buyers from withdrawing

their prospective purchase offers. See, e.g., Exhibit 5, at p. 11.

141. Wellsource, its principal, Mr. Briggs, Mr. Ohlbaum and/or Nourican had no

privilege or justification for their actions in intentionally interfering with the prospective

contractual relations between the Debtor and other potential buyers.

142. As a result of Wellsource’s, Mr. Briggs’, Mr. Ohlbaum’s and/or Nourican’s

intentional and improper interference with other potential buyers’ performance of their

prospective contractual relations, the Debtors have suffered losses as a result of these potential

buyers’ bid withdrawals.

143. This being so, the Debtors have suffered substantial damages for the

intentional interference identified above. These substantial damages consist of the pecuniary

loss of the benefits of the prospective relations between the Debtors and these potential buyers,

the consequential losses for which the interference is a legal cause; and the harm to reputation

produced by such intentional interference. In short, the Debtors are entitled to the actual

damages suffered, together with punitive damages.


against Defendants Wellsource and Mr. Briggs, Mr. Ohlbaum and Nourican in the amount of

no less than $6,750,000, which represents the difference between the sales price under the

Wellsource Agreement and sales price under the Hoober, K&M and Cargill Sales, plus

incidental costs associated with consummating the Hoober, K&M and Cargill Sales, together

with its attorneys’ fees and costs and for such other and further relief as this Honorable Court

deems just and appropriate.


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COUNT VIII

THE TRUSTEE v. DEFENDANTS WELLSOURCE, MR. NOJAY AND MR. BRIGGS

BREACH OF CONTRACT (THE DIP FINANCING FACILITY)



145. The DIP Financing Facility is a valid and binding contract between the

Debtors and Wellsource. See, Exhibit “10”. See also, ¶¶ 62-64, supra.

146. The Interim and Final Orders authorizing the Debtors to obtain post-

petition financing in the amount of $2 million ($2,000,000) under the DIP Financing Facility

constitute a binding and enforceable obligation. See, e.g., In re Ocean Power Corp., 2007

Bankr. LEXIS 5014, at *9 (Bankr. S.D.N.Y. Mar. 26, 2007) (finding that “[t]he DIP Order

and the DIP Loan Agreement are valid and binding”). See also, Exhibit 8; Exhibit 9; ¶¶ 62-

64, supra.

147. The DIP Financing Facility authorized by the Interim and Final Orders set

forth the obligations of the Debtors, as borrowers, and Wellsource, as the DIP Lender. See,

Exhibit 8; Exhibit 9; Exhibit “10”; Exhibit 1, at pp. 2-3. See also, ¶¶ 62-64, supra.

148. The Debtors performed any obligations they have under the DIP Financing

Facility and the Interim and Final Orders authorizing the same. See, Exhibit “10”.

149. Wellsource and/or its principal, Mr. Briggs, materially breached their

obligations under the DIP Financing Facility and the Interim and Final Orders authorizing the

same, as well as the implied covenant of good faith and fair dealing inherent in the DIP

Financing Facility, by failing to make contemplated advances. See, ¶ 65, supra. Specifically,

Wellsource and/or its principal, Mr. Briggs, as the DIP lenders, defaulted on their obligations

by failing to make the contemplated advances to the Debtors set forth in the Budget, including


38

the advance of the balance of the $2 million ($2,000,000) under the DIP Financing Facility,

approved by the Interim and Final Orders entered by the Bankruptcy Court. Id. See also,

Exhibit 1, at p.3.

150. As a result of Wellsource’s and/or Mr. Briggs’ breach under the DIP

Financing Facility and the Interim and Final Orders authorizing the same, the Debtors have

suffered significant damages.


against Defendants Wellsource and Mr. Briggs, in the amount of $2,000,000, plus

consequential damages, together with its attorneys’ fees and costs and for such other and

further relief as this Honorable Court deems just and appropriate.

COUNT IX


FRAUDULENT INDUCEMENT



152. As already stated, the elements of a claim for fraudulent inducement are:

(i) a representation; (ii) which is material to the transaction at hand; (iii) made falsely, with

knowledge of its falsity or recklessness as to whether it is true or false; (iv) with the intent of

misleading another into relying on it; (v) justifiable reliance on the misrepresentation; and (vi)

the resulting injury was proximately caused by the reliance. See, e.g., Atlantic Circulation,


39

supra, 2012 U.S. Dist. LEXIS 166128, at *38 citing Eigen, supra, 874 A.2d at 1185, 2005 Pa.

Super. LEXIS 901, at *13 quoting in turn Bortz, supra, 556 Pa. at 499, 729 A.2d at 560.

153. This being so, under Pennsylvania law, inducing another to enter into a

contract by means of fraud or a material misrepresentation, when the other party was under no

duty to enter into the contract, is a key element of a claim for fraudulent inducement. See,

Allegheny Int’l, supra, 954 F.2d at 178 citing College Watercolor Group, supra, 468 Pa. at 115,

360 A.2d at 206 quoting in turn RESTATEMENT OF CONTRACTS § 476 (1932).

154. As put forth in this Complaint, Wellsource and/or its principal, Mr.

Briggs, misrepresented material facts relating to the post-petition financing of the Debtors.

Specifically, Wellsource and/or its principal, Mr. Briggs, falsely represented to the Debtors and

other parties-in-interest that Wellsource was prepared to provide the Debtors with $2 million

($2,000,000) of post-petition financing under a secured DIP term loan facility. See, e.g., Penn.

Docket Entry No. 24. See also, Exhibit 1, at ¶¶ 49, 51, 81, 84; Exhibit 5, at ¶¶ 21-22.

155. In addition, Wellsource and/or its principal, Mr. Briggs, misrepresented

material facts relating to Wellsource’s financial ability to provide such post-petition financing.

In particular, Wellsource and/or Mr. Briggs, falsely represented to the Debtors and other

parties-in-interest that Wellsource possessed the financial wherewithal to fund $2 million

($2,000,000) of post-petition financing under a secured DIP term loan facility.

156. Moreover, these false representations were material in that the

representations by Wellsource and/or its principal, Mr. Briggs, that Wellsource had adequate

financial resources to provide post-petition financing under a secured DIP term loan facility

prevented the Debtors in their efforts from seeking other potential lenders. That is, the

Debtors’ Board of Directors would not have authorized management to finalize negotiations

with Wellsource had management known that, despite Wellsource’s and/or Mr. Briggs’


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representations to the contrary, Wellsource was undercapitalized and lacked the financial

wherewithal to adequately provide post-petition financing to the Debtors. See, Partners Coffee

Co., supra, 700 F. Supp. 2d at 728-29 citing Blumenstock, supra, 811 A.2d at 1036, 2002 Pa.

Super. LEXIS 3212, at *14-*15 (finding that fraud in the inducement occurs when a party

contends it would not have entered into the agreement “but for” the fraudulent statements

made by the other).

157. In like manner, even though Wellsource and/or Mr. Briggs knew that

these representations regarding Wellsource’s ability to provide post-petition financing and the

sufficiency of funds to complete said transaction were false, Wellsource and/or Mr. Briggs

nonetheless continued to make these misrepresentations to induce the Debtors to

simultaneously enter into the Wellsource Agreement and ultimately reject other marked-up

asset purchase agreements and/or letters of intent submitted by other potential buyer.


Briggs’ misrepresentations and submitted to the Bankruptcy Court the DIP Financing Motion

on October 14, 2012. See, Penn. Docket Entry No. 24. See also, ¶¶ 61-62, supra. Had the

Debtors known that Wellsource and/or Mr. Briggs lacked adequate financial resources to

provide post-petition financing under a secured DIP term loan facility, the Debtors would have

sought other potential lenders and effectively fund their business post-petition.

159. As a result of this justifiable reliance, the Debtors have suffered

damages separate and apart from the damages incurred due to Wellsource’s breach of the DIP

Financing Facility and/or the Interim and Final Orders approving and authorizing the same.

160. Furthermore, since the acts incurred by Wellsource and/or its principal,

Mr. Briggs, were oppressive, malicious and committed with conscious indifference to the

rights of the Debtors, the Debtors are entitled to and seek to recover punitive damages.


41


against Defendants Wellsource and Mr. Briggs, in the amount of no less than $2,000,000, plus

punitive damages in the amount of $1,000,000, together with its attorneys’ fees and costs and

for such other and further relief as this Honorable Court deems just and appropriate.

COUNT X


BREACH OF FIDUCIARY DUTIES



162. The DIP Financing Facility is a valid and binding contract between the

Debtors and Wellsource. See, Exhibit “10”. See also, ¶ 62, supra.

163. The Interim and Final Orders authorizing the Debtors to obtain post-

petition financing in the amount of $2 million ($2,000,000) under the DIP Financing Facility

constitute a binding and enforceable obligation. See, e.g., Ocean Power Corp., supra, 2007

Bankr. LEXIS 5014, at *9 (finding that “[t]he DIP Order and the DIP Loan Agreement are

valid and binding”). See also, Exhibit 8; Exhibit 9; ¶¶ 62-64, supra.

164. The DIP Financing Facility authorized by the Interim and Final Orders

set forth the obligations of the Debtors, as borrowers, and Wellsource, as the DIP Lender. See,

Exhibit 8; Exhibit 9; Exhibit “10”; Exhibit 1, at pp. 2-3. See also, ¶¶ 62-64, supra.

165. Wellsource and/or its principals, Mr. Briggs and Mr. Nojay, materially

breached their obligations under the DIP Financing Facility and the Interim and Final Orders

authorizing the same, as well as the implied covenant of good faith and fair dealing inherent in

the DIP Financing Facility, by failing to make any contemplated advances. See, ¶ 59, supra.


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Specifically, Wellsource and/or its principals, Mr. Briggs and Mr. Nojay, as the DIP lenders,

defaulted on their obligations by failing to make the contemplated advances to the Debtors set

forth in the Budget, including the advance of the balance of the $2 million ($2,000,000) under

the DIP Financing Facility, approved by the Interim and Final Orders entered by the

Bankruptcy Court. Id. See also, Exhibit 1, at p.3.

166. In their capacity as DIP Lenders for property of the Debtors, Wellsource

and/or its principals, Mr. Briggs and Mr. Nojay, owed fiduciary duties to the Debtors,

including duties of honesty and fair dealing.

167. As put forth herein, Wellsource’s and/or Mr. Briggs’ and Mr. Nojay’s

actions and course of conduct constituted a breach of their fiduciary duties to the Debtors.

168. As a result of Wellsource’s and/or Mr. Briggs’ and Mr. Nojay’s breach

of their fiduciary duties under the DIP Financing Facility and the Interim and Final Orders

authorizing the same, the Debtors have suffered significant damages.


against Defendants Wellsource, Mr. Nojay and Mr. Briggs, in the amount of no less than

$2,000,000, plus consequential damage, together with its attorneys’ fees and costs and for such

other and further relief as this Honorable Court deems just and appropriate.

COUNT XI


EQUITABLE SUBORDINATION AND DISALLOWANCE




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170. Because, Wellsource and/or its principals, Mr. Briggs and Mr. Nojay,

agreed to provide the Debtors with $2 million ($2,000,000) of post-petition financing under the

DIP Financing Facility and undertook both fiduciary and contractual duties in connection with

that role, for all practical purposes, Wellsource and/or Mr. Briggs and Mr. Nojay are

fiduciaries of the Debtors.

171. As put forth herein, Wellsource and/or its principals, Mr. Briggs and Mr.

Nojay, not only have acted inequitably and breached their duties to the Debtors, but have

caused substantial harm to the Debtors, its employees and its creditors. See, e.g., ¶¶ 69-75,

supra. See also, Exhibit “11”, at pp. 2-3. Therefore, any claim or interest of Wellsource and/or

its principal, Mr. Briggs and Mr. Nojay, in respect of the Debtors’ estates should be equitably

subordinated and/or disallowed to the fullest extent of the law.

WHEREFORE, the Trustee respectfully demand judgment in their favor and

against Defendants Wellsource, Mr. Nojay and Mr. Briggs, together with its attorneys’ fees and


COUNT XII

THE TRUSTEE v. DEFENDANTS MR. OHLBAUM AND NOURICAN

BREACH OF CONTRACT (THE NOURICAN AGREEMENT)



173. Under Pennsylvania law, there are two types of claimants who may be

intended third party beneficiaries to a contract: “(1) a claimant to whom the promisee has an

obligation; or (2) a claimant whom the promisee clearly intended to benefit based on the

contracts performance.” Blue Mountain Mushroom Co., Inc. v. Monterey Mushroom, Inc.,

246 F.Supp.2d 394, 401 (E.D. Pa. 2002).


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174. Here, Wellsource and its principal, Mr. Briggs and Mr. Nojay, intended the

Debtors to be the beneficiaries of the Nourican Agreement, as by the time Wellsource entered

into the Nourican Agreement, Wellsource and its principals were already working to purchase

the Feed Business and soon after entering into the Nourican Agreement, became bound by the

Wellsource Agreement. See ¶¶ 35 & 37, supra.

175. Mr. Ohlbaum and Nourican were aware of the obligations that Wellsource,

Mr. Briggs and Mr. Nojay had under the Wellsource Agreement and that the funds to be

provided under the Nourican Agreement would benefit the Debtors and allow Wellsource and

its principals to fulfill their obligation under the Wellsource Agreement.

176. Nourican and Mr. Ohlbaum materially breached their obligations under the

Nourican Agreement, as well as the implied covenant of good faith and fair dealing inherent in

the Nourican Agreement, by failing to provide financing. Specifically, Nourican and Mr.

Ohlbaum failed to provide the Funds Needed To Close by both the Initial and Second

Deadlines.

177. In so breaching, Nourcian and Mr. Ohlbaum, not only have arbitrarily and

unreasonably engaged in conduct which has impeded and derailed the Debtors’ ability to

promptly consummate the sale of the purchased assets, but have caused substantial monetary

damages to the Debtors.


against Defendants Nourican and Mr. Ohlbaum in an amount of no less than $6,750,000,


sales price under the Hoober K&M and Cargill Sales, plus incidental costs associated with

consummating the Hoober, K&M and Cargill Sales together with their attorneys’ fees and



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Dated: October 2, 2014 GELLERT SCALI BUSENKELL & BROWN,

LLC

By: /s/ Ronald S. Gellert

Gary F. Seitz

Ronald S. Gellert

601 Walnut Street

Suite 280S

Philadelphia, PA 19106

[email protected]

[email protected]

(302) 425-5806

Special Litigation Counsel for

MORRISANDERSON, LTD., in its capacity as

Trustee of the Plan Trust of ETFF Corporation, et

al.


mailto:[email protected]

mailto:[email protected]