Category Archives: Personal Bankruptcy

12 February 2020: Kelley Bankruptcy Wrapping Up

Once the Clary Lake Association purchased the dam from Paul Kelley’s bankruptcy estate back in October 2018, I pretty much stopped paying attention to what was going on in those court proceedings. I have over the months however continued to receive various court filings, all interesting after a fashion, but some more interesting than others. Nonetheless I haven’t seen fit to share any of them with our readers, but today I received the Trustee’s Final Report which details how the $80,000 we paid for the dam was spent, and it’s worth sharing. Continue reading →

28 September 2018: Bankruptcy Judge Approves FREE and CLEAR Sale of Dam!

YES!At a short hearing held today at 10 AM in Bangor at the U.S. Bankruptcy Court, Judge Michael Fagone granted the Trustee’s motion to sale the Clary Lake dam to the Clary Lake Association free and clear of the restrictive covenants under sections 363(F)(5) of the U.S. Bankruptcy code. Gone too is the Medius mortgage under 363(F)(2). Further, the Judge granted the Clary Lake Association Good Faith Protections provided by section 363(M) of the U.S. Bankruptcy code. The Judge declined to allow the immediate sale of the property so we will have to wait to take title to the Clary Lake dam in 14 days at the expiration of the appeal period. Should AQF or Richard Smith (or anyone else) decide to appeal today’s ruling, 14 days from today our attorney will simply file a motion to dismiss and <POOF> the appeal will disappear, thanks to the 363(M) Good Faith Protections. Continue reading →

Road Trip!

So who’s planning on attending the hearing in Bangor this Friday? Who’s thinking of it? I think it would be great for a contingent of Clary Lake people put in an appearance. This is the hearing when the Judge will rule on the Sale Motion and if past hearings are any indication, this one promises to be very interesting! If you’re planning on attending, drop me an email and let me know.

The hearing is at the U.S. Federal Bankruptcy Court at 202 Harlow Street, Bangor Me. See the previous post “Bankruptcy Judge to Issue Ruling in Open Court” for more information.

 

17 September 2018: Bankruptcy Judge to Issue Ruling in Open Court

We’ve all been anxiously awaiting a decision from the Bankruptcy Court on the Clary Lake Association’s efforts to purchase the Clary Lake dam from Paul Kelley’s bankruptcy estate. This morning Judge Fagone announced his intention of issuing an Oral Ruling on the Trustee’s Sale Motion in open court at a hearing at 10 AM on Friday September 28th at the United States Bankruptcy Court at 202 Harlow Street, Bangor, Maine. The hearing will be open to the public. A date for a ruling is not the same as a ruling, but I’ll take it. At least now we have an end date for the Sale Motion!

Given how much time has passed since oral arguments back on July 27th, we were all expecting the Judge to issue a written decision but our attorney assures us that Judges issue oral decisions in open court with some frequency. We have every reason to believe the Judge will approve the sale of the Clary Lake dam at that hearing, with the only question being whether he sells us the dam free and clear of the restrictive covenants or approves the sale with the covenants in place. Either way we’ll own the dam. The closing will most likely take place the following week. We have a contingency plan in place to deal with the covenants if the Judge decides not to sell the dam free and clear.

We had not counted on this sale process taking so long, and it remains to be seen whether there is enough time this fall to get the dam permanently repaired or whether we’ll need to wait until next summer for that. Needless to say we’ll do everything we can to get the dam repaired and the lake level restored as quickly as possible.

If anyone is interested in attending the hearing and is looking for a ride, get in touch with me about carpooling!

27 July 2018: Final Sale Motion Hearing Audio, No Ruling Yet

Oral arguments of the Final Sale Motion hearing took place today before U.S. Bankruptcy Court Judge Michael Fagone. Trustee Jeffrey Piampiano was represented by attorney Kaitlyn Husar, the Clary Lake Association [CLA] was ably represented by attorney Randy Creswell, and Richard Smith and Aquafortis Associates LLC [AQF] were represented by attorney Louis Carrillo. The Trustee and CLA were to receive 40 minutes combined to present their arguments in support of the Sale Motion, which time was to be split roughly equally between them. Attorney Carrillo was to be given 40 minutes to present his arguments supporting Smith’s and AQF’s objections to the Sale Motion. Finally, the Counsel for the Trustee was to be given 10 minutes for rebuttal. In fact, each party went over their time limits a little bit. Also present at the hearing representing the Maine DEP was Assistant Attorney General Scott Boak and co-counsel Kevin J. Crosman. The hearing started promptly at 10 AM and lasted about 2 hours. No ruling was issued today: after hearing the oral arguments, Judge Fagone took the matter under advisement and said he will issue his Decision and Order just as soon as he can. While I had hoped for a ruling from the bench today, the Judge was presented numerous cases to review and that was far more than he could be expected to do today.

I thought counsel for the Trustee and counsel for the CLA did a GREAT JOB of presenting their arguments, and I thought counsel for Smith and AQF was way out of his comfort zone did an incredibly lousy job of presenting his arguments, but don’t take my word for it, listen to the hearing audio and decide for yourself. Continue reading →

26 July 2018: Final Sale Motion Hearing Tomorrow

A quick reminder: oral arguments on the Final Sale Motion are scheduled for tomorrow morning at 10 AM at the U.S. Bankruptcy Court in Portland. This will be the 4th and presumably final hearing on the proposed sale of the Clary Lake dam to the Clary Lake Association. You can read the original post about the hearing for more information (see Final Sale Motion Hearing Scheduled). I will be attending the hearing, and will post the outcome here as soon as I can. Stay tuned.

12 July 2018: Final Sale Motion Hearing Scheduled

The Judge in the Paul A. Kelley Jr. Bankruptcy case has issued an Order and Schedule for oral arguments on the a Final Sale Motion on July 27th, 2018 at 10:00 AM. The hearing will be at the U.S. Bankruptcy Court, 537 Congress Street in Portland Maine. The Order is only 4 pages long and is remarkably easy reading as Court Orders go, and I highly recommend everyone read it through so you’ll have an idea of the issues the court is grappling with. The Order both summarizes the actions taken to date starting with the May 22nd filing of the Motion to Sell up to last week’s July 5th evidentiary hearing, and then lays out 8 questions that the Judge wants the parties to address in their oral arguments before the court. Continue reading →

06 July 2018: Sale Motion and Evidentiary Hearing Audio [UPDATED]

President Malcolm Burson and my wife Margaret and I attended yesterday’s Sale Motion hearing. Other parties in attendance were Butch Duncan, Richard Smith and Paul Kelley, counsel for the Clary Lake Association Randy Creswell, Bankruptcy Trustee Jeffrey T. Piampiano represented by Kaitlyn M. Husar, Esq., Assistant Attorney Generals Scott Boak and Kevin Crosman representing the Maine DEP, and attorney Dennis Carrillo representing Richard Smith and AQF. Regrettably, Paul Kelley’s bankruptcy attorney J. Scott Logan was not in attendance. Continue reading →

05 July 2018: No Sale Today, Bankruptcy Case Continued

I had hope to be able to tell everyone today that the U.S. Bankruptcy Court had approved the sale of the Clary Lake dam to the Clary Lake Association, but that announcement is going to have to be postponed for a few weeks. Thanks to objections raised by Richard Smith and Paul Kelley, today’s hearing which should have resulted in a quick decision approving the sale instead turned into a day-long evidentiary hearing with numerous parties taking the stand and testifying, and being cross examined. Court started at 9 AM and finally adjourned at 4:30 PM. A hearing for oral arguments will scheduled sometime the week after next (the week of July 16th) at a time and place to be announced. While there is little question whether the judge will eventually approve the sale to the CLA, there are questions regarding the restrictive covenants which need to be answered. Smith’s and AQF’s objections to the sale and to the scraping of the covenants provided a considerable diversion today, but ultimately I have no doubt that we’ll end up owning the dam. Patience people. We’ve been waiting 7 years for this. A few more weeks won’t hurt.

I wanted to get something posted as soon as possible because I know there are lots of people anxiously awaiting word after today’s hearing. I’ll provide additional details about today’s hearing at a later date and will post an audio transcript of today’s hearing when it becomes available.

28 June 2018: Recent Filings in the Kelley Bankruptcy

There have been some filings in the past few days in the Paul Kelley bankruptcy case including 2 Proof of Claims (Ford Motor Credit and Preti Flaherty), a Request for Notice (from Butch Duncan), and an interesting Supplement in Support of the Sale Motion by the Maine DEP. I see ALL of these filings as favorable for our efforts to purchase the dam and it is particularly gratifying to have DEP be so strongly supportive of our plan to purchase the dam. Continue reading →

24 June 2018: Update on Clary Lake Dam Purchase Initiative

Late last week we sent a letter out to our membership with an update on the Clary Lake dam purchase effort explaining where we are, what’s up ahead, and what to expect. We also sent the letter out by email to those members for whom we have email addresses, just to get the message out a little faster. If you’re a member and have given us your email address but did NOT receive the email, please check your spam folder! I’m not sure why, but typically only about 2/3 to 3/4 of the emails we send actually get opened, though in the unsolicited email world, that’s actually a pretty high response rate. Now that most people have received the letter, we wanted to post it here for general consumption since there are a lot more people than just CLA members who are anxiously awaiting news:

Dear Clary Lake Association Member:

At a hearing in Federal Bankruptcy Court in Portland on June 7, the judge approved bid procedures for the sale of the Clary Lake dam and scheduled a deadline for objections and bids of Noon on June 28. The court also scheduled a July 5 hearing date to act on the Sale Motion. Sale of property by a Bankruptcy Court is done by public auction, and we started the bidding process with our $80,000 offer for the dam when the Sale Motion was filed back on May 22. Anyone wishing to bid on the dam has until Noon on Thursday, June 28 to submit their bid along with a $20,000 cash deposit and further evidence of their ability to pay should they win the auction. The minimum bid required to beat our $80,000 offer has to be at least $93,400, an amount set in advance by the court (subsequent bids have to be at least $1000 higher than the previous bid). Should someone submit a valid bid before the deadline, an auction will be held at 2 PM on June 28 at the offices of Drummond Woodsum in Portland. If there is going to be an auction, we intend to take part in it.

We have never thought there would be any competing bids for the Clary Lake dam given the costly repairs, the underground tank (see below), and the Water Level Order which as been recently upheld by the Lincoln County Superior Court. Nonetheless, the Board feels and our attorney agrees that we would be remiss not to be prepared to respond should a bidder surface on June 28. At a meeting on June 14 the Board reaffirmed its commitment to owning the dam and agreed to compete in such a bidding process should the need arise.

We do want you to know that in the event that we are forced to bid higher in order to buy the dam, it will be necessary for us to raise additional funds so the repairs can go forward in a timely manner. You have already been incredibly generous, and we currently have no plans for a new fund raising campaign. However, if any of you have suggestions for additional funds that the Board might pursue, or might be willing yourself to contribute again, please let me or Secretary Fergusson know confidentially.

We fully expect the sale of the dam to the Clary Lake Association to be approved by the Court on July 5, and we plan to go ahead this summer with permanent repairs to the dam. To this end we have been working with an experienced contractor. On or about July 1st we’ll file the required Permit By Rule application with DEP to cover the work on the dam, which should commence around July 15 and take 2-3 weeks. As soon as we actually own the dam we’ll also be filing the necessary paperwork with DEP to transfer the Water Level Order to the Association. All Clary Lake shore owners and people who own land directly across the road from the lake will receive a notice in the mail of this proposed transfer this week. A legal notice will also appear in the Lincoln County News on June 21.

You may also have heard of the discovery of an abandoned fuel storage tank on the dam property. This tank was abandoned in the early 1960’s, we think, and by law must be removed at the land owner’s expense. In theory it would be Pleasant Pond Mill LLC’s responsibility to deal with the tank but given that Mr. Kelley is in bankruptcy, that’s just not going to happen. We didn’t learn about the tank until after fundraising was already well underway, and after some investigation we concluded that it was not going to be an insurmountable obstacle to our purchase of the dam.

The Board is confident that we will be successful in our attempt to purchase the Clary Lake dam! We will send out an update immediately following the Court ruling on July 5th or when more information becomes available. Also keep an eye on the CLA website as we’ll likely post updates there as well. If you have questions, please get in touch.

Respectfully,

Malcolm Burson, President
Clary Lake Association

We’ve already received some favorable feedback from members affirming that yes, they want the dam, they want it fixed, and they want it soon and they’re willing to donate more money if necessary to accomplish our goal.

June 7, 2018 Bankruptcy Court Hearing Audio

At the U.S. Bankruptcy Court hearing held yesterday afternoon in Portland, Judge Michael A. Fagone denied the Trustee’s Motion for Substantive Consolidation but approved the bid procedures and scheduled dates for the auction and the Sale Motion hearing. Sale Objections and competing bids are due by NOON on June 28, 2018. The auction will be held on June 28, 2018 at 2:00 pm at the Portland offices of Drummond Woodsum. The Sale Motion hearing will be held July 5, 2018 at 9:00 AM at the Bankruptcy Courtroom at 537 Congress Street.

Having the motion for substantive consolidation denied was not a setback to our plans to buy the dam. There are other, less extreme means to accomplish the same thing as substantive consolidation. The hearing was fascinating and covered a lot of ground. Here is an audio recording of the proceedings. It lasted almost 2 hours:

Besides the Trustee, the lawyers, and the legal assistants, the hearing was attended by Paul Kelley (with counsel) and Richard Smith (representing himself). The Judge has allowed Smith’s Objection to stand despite being filed late, but has not decided whether Aquafortis Associates LLC will require counsel or if it can represent itself. Butch Duncan was also at the hearing.

07 June 2018: Smith & Aquafortis File Objections in Bankruptcy Court

Yesterday afternoon Richard Smith and Aquafortis Associates LLC [AQF] together filed objections to the the sale motion and motion for substantive consolidation filed by the Bankruptcy Trustee in the Paul A. Kelley Jr. Bankruptcy proceeding back on May 22nd. The deadline for objections was actually the previous day, Tuesday, June 5th. Smith and AQF are representing themselves (pro se). There is a hearing on the bid procedures and the motion for substantive consolidation today at 2:00 PM in Portland, which I will be attending. I’ll provide an update on the hearing as soon as I can. Here, without comment, is the latest filing:

02 June 2018: More Filings in the Bankruptcy Sale Proceeding

There were two filings made Friday June 1st in the Bankruptcy Sale proceeding by J. Scott Logan Esq, counsel for Debtor Paul Kelley. The first filing, document #30, is an objection to the Motion to Sell and doesn’t contain any great surprises. The other filing, Exhibit A (document #31) is a letter from attorney Sarah McDaniel on behalf of Butch Duncan addressed to Bankruptcy Trustee Jeffrey T. Piampiano and it’s a bit of a head-scratcher:

Debtor’s Objection to the Sale Motion is interesting. And short (only 2 pages). Not surprisingly, the Debtor (Paul Kelley) opposes the sale of the dam without the “water level covenants” (the restrictive covenants) but doesn’t give any good reasons for keeping them other than stating that the “covenants pertain to environmental benefits and should not be stripped off as a matter of public policy.” What does that even mean? How does draining 300 acres of prime wetlands result in environmental benefits? Since Kelley will no longer own the dam and claims he has nothing to do with and no interest in Aquafortis Associates LLC, or their property, why should he care if the covenants remain in place? Continue reading →

31 May 2018 Bankruptcy Court Update: State Files Response in Support of Trustee’s Motions

Representing the Maine Department of Environmental Protection, Assistant Attorney General Kevin Crosman, Esq. has filed a brief with the U.S. Bankruptcy Court in response to motions filed last week by Bankruptcy Trustee Jeffrey Piampiano, Esq. The State fully supports the Motion for Substantive Consolidation, the Motion to Sell, and the proposed bid procedures with respect to the bankruptcy sale of the Clary Lake dam. It is very helpful having the Maine Department of Environmental Protection take this position.

The State’s Response Brief is short, concise, and to the point:

 

25 May 2018: Motion to Sell Filed in Bankruptcy Court

And we’re off! On May 22nd after weeks of preparation, Bankruptcy Trustee Jeffrey T. Piampiano, Esq. has finally filed with the United States Bankruptcy Court a Motion to Sell the Clary Lake dam to the Clary Lake Association. The Trustee also filed at the same time a “Notice of Sale and Invitation to Bid Motion” and a “Motion for Substantive Consolidation” (more about this later). A hearing has been scheduled for June 7th at 2:00 PM at the United States Bankruptcy Court at 537 Congress Street in Portland Maine to consider the proposed bid procedures and act on the Motion for Substantive Consolidation. Objections to the motions must be filed by June 5th. A hearing date for the Sale Motion proper will be set at the June 7th hearing for sometime later in June, presumably also in Portland, though that remains to be seen. All of these hearings are open to the public should you want to attend. I’ll post the Sale Motion hearing date, time, and place as soon as it has been scheduled. Assuming the Judge approves the Sale Motion, we should own the Clary Lake dam before the end of June 🙂 Continue reading →

10 November 2017: Foreclosure Papers filed on Kelley’s Camden Home

If Kelley’s filing for personal bankruptcy protection came as a surprise the other day, I was shocked to discover during a routine check of the Knox County Registry of Deeds that his home is in the process of being foreclosed: ARVEST Central Mortgage Company of Arkansas, the current owner of the mortgage on Paul Kelley’s home at 171 Molyneaux Road in Camden, has initiated foreclosure proceedings in Knox County District Court. The company filed their original Complaint for Foreclosure with the Court back in August and an amended Complaint on September 25th, and recorded a notice in the Knox County Registry of Deeds on November 2nd, just one day after Kelley filed for chapter 7 bankruptcy:

I’m somewhat at a loss as to what to say about this latest development. Granted, he hasn’t lost his house yet, but by the time it reaches this stage of the game, foreclosure is almost guaranteed. I have always only wanted Kelley to fix the dam and comply with the Clary Lake Water Level Order, or transfer the dam to the Clary Lake Association and let us take care of it. Whatever. I didn’t expect Paul Kelley to lose his house in the process and while I am sorry it has come to this, I guess I’m not surprised, and I’m not going to lose any sleep over it: he has brought this on himself. His relentless, single-minded pursuit of a spiteful, futile vendetta against Clary Lake has only succeeded in creating a shambles of his life. Somehow I don’t think Paul Kelley expected things to turn out this way; the only thing that surprises me is how he ever thought it could turn out any other way.

Stay tuned.

07 November 2017: Paul A. Kelley Jr. Files for Chapter 7 Bankruptcy

Paul A. Kelley Jr., principal of the now-defunct Pleasant Pond Mill LLC and presumed owner of the Clary Lake dam has filed for Chapter 7 Bankruptcy. This bankruptcy filing is not to be confused with the Pleasant Pond Mill LLC chapter 7 bankruptcy filing last spring. Now Kelley is filing for personal bankruptcy and as such, it’s a real eye-opener: it lists total assets of $283,953.00 (most of which is his house and property in Camden) vs. total secured and unsecured liabilities of $2,097,379.00 (that’s two million, ninety seven thousand, three hundred and seventy nine dollars) of debt including $494,186.00 of money owed to Preti Flaherty which is separate from the $335,000.00 that PPM owes to Preti Flaherty. This brings total legal fees for Kelley and PPM to $829,176.00. Woof.

Things are pretty bleak on the income side of things too with Mr. Kelley (who claims his job is landlord) claiming a monthly income of only $1500 to cover $3,731.00 of monthly expenses. Oh my. He lists 18 creditors (people/entities he owes money to) including DEP, Arthur Enos, Equinox Collection Services, Ford Motor Credit, Medius L3C, and Richard L. Smith. Without further adieu:

The first Meeting of Creditors is going to be November 28, 2017 at 10:00 AM at the Augusta Armory. The bankruptcy trustee is Jeffrey T. Piampiano.

Stay tuned 🙂