C.M. Meiers Co. Auctioned for $1.4 Million

C.M. Meiers Co. Auctioned for $1.4 Million

Former employees and their attorneys piled into United States Bankruptcy Court Central District of California San Fernando Valley Division’s courtroom in February. The 76 year old, Woodland Hills based insurance brokerage company was auctioned off at $1.375 million, though with the accumulation of up to $1 million in liabilities that will be required to put the firm back in trust.

C.M. Meiers was purchased by Liberty Co., a 25-year-old brokerage with a handful of providers and $50 million in premium. Two other Woodland Hills firms participated in the bidding war, both backing out due to the high risk and required money needed to put the firm back in trust.

After the sale was finalized, Liberty Co. filed a suit against the previous owners claiming C.M. Meiers of raiding their accounts in order to start a new firm. The conclusion of the trial also charged previous owners of C.M. Meiers with allegations of unfair competition, misappropriation of trade secrets and interference with contractual relations.

Shortly after, the defendants filed a countersuit claiming that Liberty created a shell corporation in order to shield themselves from liability of wrongful conduct. The counterclaim lists libel, slander, common law unfair competition, statutory unfair competition, and tortious interference with prospective business advantage in its allegations.

Defendant Eric Rothman states in his countersuit that “Liberty is suffering from ‘buyer’s remorse’,” and that Liberty is backtracking as their purchase is not living up to expectations. While the countersuit does not explicitly express an amount for damages, the amount is expected to be for over $1 million. The counterclaim asserts that not Liberty has caused not only financial harm, but also damaged C.M Meiers’ professional reputation.

The firm’s current state is still unknown, with Liberty claiming there is not enough in the trust to pay current premiums, and stating they must conduct a full audit of C.M. Meiers to determine what is required to bring the firm back into trust. Liberty also claims it has received many letters from former C.M Meiers customers wanting to move their accounts to temporary former owner of CMM, Affinity Global.

Former Owners of C.M. Meiers claim to be struggling with business due to the allegations made by Liberty.

The future of both the former owners and current owners are unknown. With allegations of damages over $1 million, more than the current liabilities currently held by Liberty, and the tattered state of the former owner’s new firm, both companies have a significant amount to lose upon the courts decision. A decision on either side could mean a death blow to the company.