Court-appointed receiver Timothy Hassenger is working on getting hundreds of truckers’ accounts receivable paid nearly three weeks after a legal feud between brothers regarding the assets of a family trust led to the abrupt shutdown and firing of all employees at CoreFund Capital, a Texas-based factoring company.
Some small-business truckers were forced to cease operations or couldn’t pay their drivers or buy fuel when CoreFund stopped answering phone calls or emails from desperate truckers after the office went dark July 18.
Since Parker County, Texas, District Judge Graham Quisenberry appointed Hassenger as the receiver for CoreFund last week, Hassenger and former employees are back in the office working to “reestablish the CoreFund operations.”
On Friday, Michelle Buckalew, managing director of PR firm Sunwest Communications, said CoreFund is “fully operational” as Hassenger, along with CoreFund employees, work on addressing “customers’ needs and providing them with cash flow solutions and the level of care and service they deserve.”
Buckalew was hired to work with CoreFund’s communications team and the receiver to address carriers’ concerns.
In an email to FreightWaves, Buckalew said CoreFund is solvent and plans to stay open after the truckers get paid.
She said Hassenger plans to release the carriers that want to find a new factoring company but that “many are choosing to stay with CoreFund.”
Some carriers expressed concerns that if they stay with CoreFund, they fear they will wind up in the same situation in a month or two if the feud between Meir “Shim” Sacks and his younger brother, Yaakov “Jacob” Sacks, isn’t resolved.
“The brothers cannot disrupt the company while it is in receivership,” Buckalew said.
Read more here: Carriers unable to pay drivers, buy fuel after CoreFund Capital closes
What’s the feud about?
According to court documents, Shim Sacks founded CoreFund Capital in 2014. CoreFund is a wholly owned subsidiary of GMA Fund LLC, the holding company for the Shim Sacks Family Legacy Trust, which he created in October 2014.
As part of the original trust, Shim Sacks granted special power of appointment to Jacob Sacks.
According to court filings, Jacob Sacks “exercised this special power of appointment he holds” under the original trust and transferred the trust’s assets, including the holding company that owns CoreFund, to a new trust he created, the Sacks Family Grandchildren’s Trust, on July 12.
While the old trust only named Shim Sacks’ children as beneficiaries, the new trust lists both brothers’ children as beneficiaries. It also names CoreFund’s longtime president, Bonnie Castillo, as the sole manager of CoreFund.
It’s unclear why Jacob Sacks created the new trust.
The law firm Warren Fonville of Fort Worth, Texas, which is representing the younger Sacks, did not respond to FreightWaves’ request for comment.
Shim Sacks did not respond to FreightWaves’ request seeking comment.
What happened?
Truckers were hit with a double whammy after CoreFund went dark in mid-July and no one was in the office to release them from the UCC-1 (Uniform Commercial Code) liens filed by the factoring company against the carriers’ assets. They also needed a revocation of a notice of assignment that is sent to the truckers’ customers instructing them to make a payment to CoreFund, which in turn pays them.
Jason Medley, partner with law firm Spencer Fane in its Houston office, is representing more than 100 trucking companies that were affected by the CoreFund shutdown.
He said the CoreFund situation is rare in the factoring world.
“This is a moving target for sure,” Medley said in an email to FreightWaves. “After several communications with their team, we are allowing the receiver’s staff and the CoreFund staff (many of whom we are told returned to work under the pending receivership) to have time to access the computer systems and review the list of our carriers, which number slightly above 100 at the moment.”
In a status hearing via videoconference on Wednesday with factoring companies, as well as attorneys and truckers, Medley said carriers just want to get back to work even if that means leaving CoreFund for another factoring company.
“We just need the folks behind the wheel to get released so they can haul loads and get paid,” Medley told FreightWaves. “The world has enough supply chain problems as it is. And there are tons of great factoring companies that are ready, willing and able to pick up the pieces. We just need them to be allowed to do so.”
He warned factoring companies to be cautious if they decided to fund truckers because of the UCC liens and the notice of assignments that are still in place with CoreFund.
Buckalew agreed.
She said CoreFund plans to release the carriers that want to find a new factoring company, but it could be risky for those companies that are already factoring CoreFund truckers’ accounts receivable.
“CoreFund’s UCC statements are still in place, and any factoring company that makes a loan is in a second lien position,” she told FreightWaves.
