Bonneville Pacific has filed a lawsuit against one of the company's former officers, demanding that he return more than $500,000 he received in severance pay shortly before the company declared bankruptcy.
Roger Segal, Bonneville Pacific trustee, filed the suit against former chief financial officer Stephen Nadauld in U.S. Bankruptcy Court. Segal wants Nadauld to return $507,054 in severance and vacation pay that Nadauld received in May and June 1991.Segal also wants Nadauld to pay 10 percent interest annually on the sum from the day he received the money until it is paid back in full.
Nadauld plans to fight the request, said Randon Wilson, Nadauld's attorney. "We researched the law and concluded that he will not have to pay back one penny. The payments were entirely legal and appropriate in every way."
"Mr. Wilson will have to convince the judge of that. We think he is dead wrong," said Vernon L. Hopkinson, attorney for the trustee.
Nadauld won't be the only former officer sued by the company's trustee. "This one is a very clear case and that's why the suit was brought first," Hopkinson said. "It was the quickest and the easiest."
Federal bankruptcy law allows a bankrupt company to demand the return of bonuses and severance pay given to company officers if the pay was given within a year of the company's bankruptcy.
Bonneville Pacific declared bankruptcy six months after paying Nadauld $507,054.
Bonneville Pacific will likely sue other former officers in coming months and demand that they, too, return some of the millions of dollars the company paid out in bonuses, severance pay and other perks, he said.
"Don't interpret this as the end of the lawsuits against the company's insiders. The investigation into everybody else is continuing."
Bonneville Pacific may seek the return of large sums paid to company officers as long ago as 1986, Hopkinson said.
The $507,054 Segal wants back involves $10,230 in accrued vacation pay, $155,540 in severance pay and $341,284 in incentive pay. The company gave Nadauld the money in May and June of 1991.
The incentive pay was outlined in a September 1990 contract between Nadauld and Bonneville Pacific. The company agreed to pay Nadauld the cash equivalent of 83,333 shares of Bonneville Pacific stock as a performance incentive. The entire sum was due to Nadauld immediately if he left Bonneville Pacific before May 1993.