Complaint targets former PurchasePro exec

Kevin Rademacher

Thursday, Sept. 2, 2004 | 10:47 a.m.

A U.S. Bankruptcy Court complaint has been filed seeking more than $2 million from former PurchasePro.com Inc. Chief Executive Richard Clemmer.

The complaint was filed on Wednesday by the failed Las Vegas e-commerce company's unsecured creditors committee. The document claims that a $1.1 million "sign-on" bonus Clemmer received when he joined the company as well as a $1.3 million loan he received and was later forgiven amounted to "illegitimate gains" given the financial state of the company.

"The payment of the funds was not a fair exchange to (PurchasePro) and was a fraudulent transfer," the lawsuit said, asking the court to order the disgorgement of those funds.

Clemmer joined PurchasePro as chief financial officer in May 2001 amid financial turmoil. Less than a month later he was promoted to the company's top post after founder Charles "Junior" Johnson was forced out.

The company filed for bankruptcy in September 2002.

Clemmer's attorney could not be reached for comment on the complaint.

Any funds collected from the complaint against Clemmer would be turned over to the failed company's bankruptcy estate and used to satisfy creditors' claims against the company.

In March the company's estate filed a similar complaint seeking the return of $6.1 million Johnson received from PurchasePro in 2001.

Of that total, $2 million was a "retention bonus" PurchasePro paid to Johnson in April 2001, just a month before he was forced out as chief executive and chairman of the board amid mounting legal trouble for the company.

The balance of the disputed total is $4.1 million paid to Johnson in December 2001 as a cash transfer and a subsequent stock transfer to cover business expenses and unexercised stock options.

Also on Wednesday, Bankruptcy Court Judge Bruce A. Markell gave tentative approval of a reorganization plan that could ultimately provide a return for shareholders of the failed Las Vegas e-commerce company.

In court Gergory Garman, an attorney representing the bankrupt company's estate, said creditors had voted overwhelmingly to support the plan.

The plan spells out the payment of of more than $500 million in taxes to four states as well as unpaid wage and unsecured claims estimated at between $10 million and $12 million. Meanwhile the estate is pursuing a series of lawsuits to recover additional funds. The excess would go to shareholders.