Trustee for parent firm of Psychic Friends stays Bankruptcy judge rejects Inphomation's objection to outsider

March 04, 1998|By William Patalon III | William Patalon III,SUN STAFF

U.S. Bankruptcy Judge James F. Schneider yesterday rejected a request by Inphomation Communications Inc. to reconsider his decision to install an outsider as head of the bankrupt Pikesville firm.

The judge's ruling was the latest development in the soap opera-like saga of Inphomation, which filed for Chapter 11 bankruptcy-law protection Feb. 2, listing assets of $1.2 million and liabilities of $26 million. Just a few years ago, Inphomation Communications had annual sales approaching $140 million, company officials said.

The company had made its mark with its Psychic Friends Network, which linked consumers with telephone psychics via 900 numbers and employed singer Dionne Warwick as a celebrity spokeswoman.

On Feb. 18, after a two-day hearing in which Inphomation founder Michael W. Lasky made a tearful plea to keep control of his company, Judge Schneider ruled that Lasky and others within Inphomation were diverting assets and business to a clandestine shell company called Friends to Friends Ltd. As a result, he ruled that a nonpartisan trustee be placed at the helm. Last week, attorney Paul Michael Sweeney of the law firm of Linowes & Blocher LLP was named trustee.

In the motion asking Schneider to reconsider, attorneys for Inphomation claimed that creditors railroaded through a motion to get an outside trustee. Indeed, while admitting to creating Friends to Friends, Inphomation said it was crafting a plan of reorganization that creditors did not give a fair amount of time to articulate. Friends to Friends was a critical piece of that plan, since it would be able to borrow money where Inphomation, with its ruined credit rating, would not.

Bankruptcy attorney James C. Olson, who has represented Inphomation since January, said he was disappointed by TC yesterday's ruling but noted that "this isn't over yet."

Olson said it was too early to say what Inphomation's next step would be.

Attorney Richard Wasserman, who represents a group of Inphomation Communications creditors, refused to comment on the bankruptcy proceedings.

Pub Date: 3/04/98

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