Judge: KSL's 2013 Transactions to Be Reconciled12 Feb, 2014 By: Doug McPherson
ENCINO, Calif. – David Gottlieb, the new trustee of the bankrupt agency KSL Media, is restarting the reconciling process to examine media purchases KSL leaders made in the spring and summer of 2013 – before it went out of business in September.
The judge overseeing the firm’s wind down gave Gottlieb the authority to move forward after Gottlieb argued to the court a reconciliation was critical so KSL could make a fair disposition of its assets to creditors. MediaPost reports those assets include at least $30 million in cash.
The reconciliation process stopped in December when KSL Media converted its Chapter 11 case into a Chapter 7 liquidation proceeding.
One source has said advertisers who prepaid their buys need to know those payments reached the intended media vendors. Otherwise, they’d owe for ads placed on their behalf, but never paid for by KSL. Gottlieb said a client would prepay for buys that didn’t all get placed. Instead of returning the money to the client, KSL would issue a credit instead.
Gottlieb is also examining if additional money is recoverable from at least two of KSL’s former top-ranking executives: founder and Chairman Kal Liebowitz and CEO Hank Cohen.
As part of that investigation, the judge overseeing the case, Alan M. Ahart, has given Gottlieb subpoena power to question both executives under oath. Gottlieb has claimed Liebowitz borrowed millions from the company that may be recoverable for payment to creditors. Gottlieb has also said both Liebowitz and Cohen may have received improper payments from a client transaction that may rightfully belong to the bankrupt agency.
Gottlieb also said he would hire back about a dozen KSL staffers who would work as independent contractors on the reconciliation project. The judge also granted him authority to pay back wages to those KSL staffers let go at year’s end who were not paid in full for their work.