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CRS Bankruptcy Complaint Filed

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Corporate Resource Services’ (CRS) Chapter 11 trustee filed with the U.S. Bankruptcy Court a complaint against Culmin Staffing Group.

The complaint alleges, “CRS’ operating subsidiaries combined to form highly successful staffing companies that generated approximately $1 billion in revenue in 2014. In the run up to commencement of these Chapter 11 cases, however, CRS sold off – and gave away – certain valuable business assets for far less than reasonably equivalent value. The transfer at the center of this case is a prime example: as of March 2, 2015, pursuant to a Purchase Agreement, the Debtors essentially gave away all their Florida business operations (the ‘Transfer’) – which in 2014 were responsible for approximately $38 million in revenue and $2 million in EBITDA – for a mere $4,700 to the Defendant, Culmin, a company operated by former Debtor insiders. Culmin is a staffing company run by Jeff Raymond, the former Chief Executive Officer of Debtor Accountabilities, and CRS’ former President and Chief Operating Officer Mark Levine.”

The complaint continues, “Tellingly, Levine became President of Culmin shortly after he helped negotiate this windfall (supposedly on behalf of the Debtors). With Levine effectively on both sides of the Transfer, the Debtors transferred to Culmin: (i) twelve (12) of the Debtors’ locations and turn-key business operations in Florida (the ‘Transferred Business Operations’); (ii) nearly 400 of the Debtors’ customers (the ‘Transferred Clients’); and (iii) certain additional assets (the ‘Additional Transferred Assets,’ and together with the Transferred Business Operations and Transferred Clients, the ‘Purchase Agreement Assets’)….Worse yet, Culmin flouted even this meager and insufficient earn-out provision since closing. Since the date of the Transfer, Culmin has paid the Debtors a single earn-out payment of approximately $4,700, which did not comply with the Purchase Agreement. The time has finally come for Culmin to fairly compensate these estates for the valuable assets it took nearly three years ago.”

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