HOUSTON -- In a statement issued after the first hearing in the bankruptcy case of Credit Card Center, its onetime largest distributor, Tidel Technologies Inc. (Nasdaq:ATMS) warned that it could incur a significant charge to earnings for the quarter ended June 30, 2001, or in future periods, if the anticipated proceeds from the liquidation of CCC's assets exceed the amount it owes to Tidel.
CCC filed for protection under Chapter 11 of the United States Bankruptcy Code on June 6 in the United States Bankruptcy Court for the Eastern District of Pennsylvania. The financial information accompanying the petition indicated that CCC had total assets of approximately $34 million and total liabilities of approximately $87 million.
The preliminary data is incomplete, but detailed schedules summarizing all assets, including the collateral pledged to secure the amounts due to Tidel, are expected to be filed by June 21.
At the filing date, CCC owed Tidel the principal amount of approximately $27 million, excluding any amounts for interest and other charges. The obligation is secured by a collateral pledge of accounts receivable, inventories and transaction income.
According to Tidel, it has not received any payments from CCC on amounts due since January 2001. Tidel has not shipped any products to CCC since December 2000.
Tidel filed a complaint against CCC in May in an attempt to recover the funds. According to John Goodchild, an attorney with Morgan, Lewis & Bockius LLP, the Philadelphia firm representing Tidel, that case was halted by the bankruptcy filing.
"I don't know what (CCC's) motivation was, but a typical motivation for filing bankruptcy is to stop litigation, halt collection efforts or both," Goodchild said.
