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Accusations and Allegations Continue Against Atlanta Light Bulbs

Accusations and Allegations Continue Against Atlanta Light Bulbs

As two sides line up to determine how they should receive payment allegedly owed to them by lighting distributor Atlanta Light Bulbs, more accusations and allegations have surfaced in their recent legal filings.

Halco Lighting Technologies, Candela Corporation, and Norcross Electric Supply filed an involuntary bankruptcy petition against Atlanta Light Bulbs back in April of this year. Halco alone claims it is owed more than $300,000. The three organizations are now working together to try to collect past money owed, and are now filing their legal documents together as “The Official Committee of Unsecured Creditors of Atlanta Light Bulbs” or “The Committee”.

Tandem Bank has filed a separate bankruptcy claim against Atlanta Light Bulbs, claiming it gave the distributor a $600,000 loan in September of 2020, which due to interest and penalties, is now more than $650,000. Tandem believes it should receive any payment from the bankruptcy before The Committee. In filings to present their cases to a bankruptcy judge, both The Committee and Tandem Bank leveled a number of accusations at Atlanta Light Bulbs. As of June 15, Atlanta Light Bulbs has not created any filings or responded to orders from the bankruptcy court to provide financial information.

The Committee’s latest court filing on June 13th repeats what was written in past filings, “The debtor, Atlanta Light Bulbs, Inc., has not shown up in this case in any way. Notwithstanding clear deadlines to do so, the Debtor has failed to respond to the involuntary petition, file a creditor matrix, schedules or statement of financial affairs, and to the best of the Committee’s knowledge, to respond to Rule 2004 discovery issued by Tandem Bank. Simply put, the Debtor has not participated in this case and has blown deadlines to file critical documents.”

The filing alleges owner Jessica Mendoza embezzled funds for personal reasons.

…improper transfers of funds from the Debtor to insiders in the past approximately one-and-one-half years totaling in excess of $1.8 million. Specifically, of the $1.8 million that was transferred to insiders during that time period, nearly $600,000 went to Ms. Mendoza and another more than $1.2 million went to her boyfriend, Robert Taitz. It is noteworthy that, on information and belief, Ms. Mendoza never received anywhere near $600,000 in compensation for her role at the company since she acquired her shares and began working at the business. Further, the more than $1.2 million that was transferred to her boyfriend was not, on information and belief, earned compensation or payments in satisfaction of any debt owed by the Debtor to Mr. Taitz. As such, these payments would appear to be fraudulent transfers that are subject to avoidance and recoverable for the benefit of the estate and its creditors.”

Additional information from the June 13th filing shows The Committee believes Atlanta Light Bulbs remains a valuable business that can still realized, “through a reorganization or sale of the business, provided that competent and experienced management is put in place to run the Debtor through a chapter 11 process until a reorganization or sale.” The Committee says it is observing business at Atlanta Light Bulbs, by writing to the court, “In addition, members of the Committee have both driven to and observed obvious business activities taking place at the Debtor’s main facility and have placed phone calls to the Debtor’s business to confirm willingness and ability to continue to take orders.”

But that is in contrast to the filing by Tandem Bank on June 10th which says Mendoza appeared before a United States Trustee for the bankruptcy case and, “averred that Debtor began winding down operations upon the filing of the Involuntary Petition and laid off all employees in mid-May 2022.” The Tandem Bank filing also reports it went to a satellite office for Atlanta Light Bulbs and, “the Office Premises had been vacated with the only remaining items being:  3 – 5 cubicle office systems; 8 – 3 drawer cabinets which slide under the cubicle desks;  1 – 4 door credenza and  1 – office chair.” Tandem Bank holds a first priority lien on on the contents in the office.

The Atlanta Light Bulbs website is still operating, including a list of products for purchase and ways to pay through Google Pay or Apple Pay. Atlanta Light Bulbs lists a number of NAED manufacturer companies in its product line, including Halco, Keystone Technologies, Lithonia Lighting, GE Lighting, Lutron, Maxlite, Philips, SATCO, EiKO, RAB Lighting, and Osram. The website says ““We’ve been in business since 1981 and have made it this far by being a brand and company that people can trust and are happy to shop with. Trust is earned and we don’t take that lightly. We pride ourselves in working with trusted suppliers and always back the product we sell. We are committed to quality. We are people first and operate our business with morals and virtue. We pride ourselves in honesty. We value and respect our customers and employees, the only way to build a lasting relationship.”

The Committee is asking the court to appoint a Chapter 11 bankruptcy trustee, which would allow Atlanta Light Bulbs to stay in business and reorganize its debt. Tandem Bank is asking for a Chapter 7 bankruptcy case, which would allow the sale of all assets to pay back debt.

In an additional filing, Ford Motor Credit claims Atlanta Light Bulbs owes $459,433 on seven Atlanta Light Bulb vehicles. Ford Motor Credit Company is asking the court for permission to take possession of the vehicles during the bankruptcy case.

 

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