Ex-president sues Parks Sausage Co. Reginald Haysbert seeks $16,469 for consultant work

'We just can't afford it'

Case is scheduled for Sept. 16 in city District Court

Legal action

September 02, 1997|By Sean Somerville | Sean Somerville,SUN STAFF

Reginald Haysbert, the former Parks Sausage Co. president who sold the bankrupt company to Franco Harris last year, is suing Parks for more than $16,000.

In a lawsuit scheduled for trial Sept. 16 in city District Court, Haysbert charges that Parks LLC, Harris' company, failed to live up to an agreement to pay him $150,000 over two years. The agreement required Haysbert to provide consulting services and to refrain from competing with Parks.

The payments to Haysbert were supposed to be made in monthly installments over two years, starting last October. In the suit, Haysbert charges that Parks LLC missed three payments -- February, March and April -- and owes him $16,469.04.

"We have significant doubts about the company's ultimate survival and we want to get out of this thing as quickly as possible," said Robert Fulton Dashiell, Haysbert's attorney.

The suit comes a year after Haysbert and his father, Raymond Haysbert, then the company's chairman, sought Chapter 11 bankruptcy protection for Parks as part of the sale.

As part of the deal, three major creditors forgave the company more than half of $8.2 million in debt. One creditor was the city, which agreed to take $500,000 to satisfy a $2.4 million debt.

Reginald Haysbert did not return calls seeking comment last week.

Dashiell said Parks has made only one or two monthly payments. He said Haysbert limited his claim to three monthly payments to get the suit moved to District Court, which has jurisdiction over civil cases with amounts less than $20,000. Increasing the claim amount would put the case in Circuit Court, likely causing a delay.

Raymond Haysbert said Parks also has failed to fulfill a separate consultant's contract with him that required payments of $25,000 last year and $25,000 this year.

"They have fulfilled none of the provisions," the elder Haysbert said, adding that he has no plans for litigation. "I'm trying to give them every chance to make their mistakes and survive."

Harris, the former football star, said Parks hasn't paid all its obligations for a simple reason.

"We just can't afford it," he said. "Not that we don't want to. It's something we just can't do. Do I pay him or do I pay the employees who work there? We have a payroll to meet every two weeks."

Harris, who projects a "substantial" loss for the company's fiscal year ending Sept. 30, declined to release additional details about Parks' financial condition. He said the company's inability to pay Haysbert does not reflect deepening financial difficulty.

Harris also said Parks has succeeded over the past several months at recapturing many of the customers it lost before the Haysberts sold Parks a year ago.

"I guess you can say we're looking at turning the company around," Harris said.

He said the company has a long way to go. "Most of our major suppliers are still on COD," or cash-on-delivery, meaning they demand up-front cash for goods and services, Harris said.

Raymond Haysbert estimated that sales over the past 10 months are about $8 million. That puts the company on a pace to fall far short of the $20.5 million in annual sales that it had two years ago.

Parks employs about 65 people, down from the roughly 130 employed in Baltimore in 1995. Under Harris, Parks did not rehire the roughly 80 workers responsible for sales and distribution along the Northeast corridor. The company is using independent distributors to do the jobs.

Harris purchased Parks for $1.7 million last September. As part of the deal, Baltimore Development Corp., the city's economic development agency, agreed to convert a $450,000 past-due debt to a 10-year, $400,000 loan. NationsBank forgave $2.4 million of a $5.4 million loan.

The Haysberts were retained as consultants as part of the deal. addition to cash payments amounting to $50,000, Raymond Haysbert was to receive a 4 percent stake in the company and 0.5 percent of Parks' gross revenue over the next seven years. His share of gross revenue could not exceed $110,000. In return, the elder Haysbert would serve as a consultant for the company for 15 hours a week over seven years.

Parks' pact with Reginald Haysbert required him to serve as a consultant for 20 hours a week over an eight-week period after the sale, in return for the 24 monthly payments amounting to $150,000. The younger Haysbert would get a 2 percent share in the company.

Harris questioned whether Reginald Haysbert provided the consulting services promised. "I'm not around there all the time," Harris said. "But I haven't seen him too much."

In the lawsuit, Reginald Haysbert says he provided the services.

And Dashiell said Reginald Haysbert tried to work with Parks to restructure its obligation before filing the suit. "We don't think they made a good-faith effort," he said. "There was no offer to settle this until after we filed."

Harris said a settlement is possible. "Hopefully, reasonable heads will prevail on this," he said.

But Dashiell said Haysbert rejected a settlement offer from Parks last week. He wouldn't disclose the terms, but said Haysbert will not accept changes in the terms unless payment is personally guaranteed by Harris.

"The only real risk to my client is that the company may fail and wind up in some sort of insolvency proceeding," Dashiell said.

Pub Date: 9/02/97

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