Harvey Minschew was a man. He lived an unremarkable life. He was raised a Presbyterian in a middle class midwestern household by mostly faithful, staid parents. He never wanted for anything essential, and never wanted anything nonessential.
Harvey had two younger sisters, not particularly unique or special, but pleasant enough. Both were high school graduates who finished ranked in the lesser half of their classes, two years apart. They did not attend college, and never married.
Harvey’s mother was a housewife through Harvey’s college years, but later ventured into volunteer work. She had always been active in the church. Her housekeeping met critical mass. She prepared dinner six evenings per week; spaghetti on Mondays, city chicken on Tuesdays, pot roast on Wednesdays, eggs and bacon on Thursdays, meatloaf on Fridays. On Saturdays she ordered pizza. She served baked chicken after church on Sundays.
Harvey’s father was the Assistant Vice President of a regional farm equipment company, seldom spoke when at home, drank too much, and suffered from excessive flatulence and chronic toenail fungus. He was bald, overweight, and generally unhealthy. He did have one impressive talent. He could wiggle his ears.
During most of Harvey’s childhood the family had one dog, a chihuahua named Raymonde. In his later years, Raymonde exhibited a distinct decline relative to matters of excremental etiquette, went blind, and developed a rather insidious skin disease. He was greatly loved, nonetheless.
Harvey was a solid C minus student through college, was decidedly unathletic, clumsy, socially inept, and generally a dim bulb. Yet he managed to succeed in getting admitted to the least selective law school in the country with the lowest percentage of graduates passing their respective bar exams. Harvey graduated second to last in his class after five years.
He passed the bar on his seventh try. Then, after a year of patient pursuit of what in his mind was the optimum opportunity, Harvey was hired as an associate at a small jackleg firm in his hometown. His starting salary was $975 per month. It was 1959.
The day he was hired, he purchased a used two-tone yellow and brown 1955 Chevrolet Belair with eighty-seven thousand “highway” miles. It had a cream interior with optional plastic seat covers, three on the tree, a clock, AM radio, and floor mats. The salesman told him the tires had less than five thousand miles, which appeared to be quite a stretch. But they were whitewalls. He proudly drove off the lot that hot summer day, windows up so people would think he had “air”.
Harvey proceeded directly to Robert Hall’s where he had his six foot four, two hundred and fifty pound frame fitted for three suits; one was midweight gray, one midweight navy--both worsted wool with two pairs of pants. He completed his wardrobe with a classic blue and white seersucker summerweight.
He bought five white perma-press Arrow dress shirts, and five rather garish bowties. Yes, Harvey, like his dad, was a bowtie man. He topped it all off with two pairs of Florsheim wingtips, one pair in black and one in cordovan brown. He added ten pairs of socks, all black so as to eliminate the risk of mismatches.
Harvey was ready to join the living.
After ten years, twice the normal time, Harvey made junior partner, but less than a month later with the influence of one Jed Harper, a member of the Minschew family’s church, Harvey was hired as in-house counsel at the locally headquartered Acme Plastics Company. Apparently, Jed owed Harvey’s mom a favor.
It was discovered many years later by Harvey that the favor Jed owed his mother was for his mother’s silence over the night Jed had unceremoniously conscripted Harvey’s mother’s greater affections in the basement kitchen of the church, on the food prep table, in the dark. It was the night of the church’s annual blackface Vaudeville show, building fundraiser, and potluck. One would hope this kitchen conjugation had no effect on the hygienics of the evening’s repast.
As it turns out it was at that same potluck where Harvey met his future bride Annabelle, a rather forlorn appearing first grade teacher who had recently joined the church after moving from Terre Haute. It was her first; not Harvey, the teaching job. She had, though, figured she could find a man through the church, and that ended up being Harvey. She wasn’t attracted to Harvey and in fact found him to be quite dull, but he was a Presbyterian and a lawyer and that was good enough.
Over the next ten years Harvey and Annabelle had two unremarkable children, and Harvey worked his way up in stature at Acme. He started to take on some slightly more important cases than in the past, which had previously been sent to outside counsel.
One of those cases involved a local customer who was in default on a seven hundred thousand dollar receivable obligation to Acme. The indebtedness was for plastic manure bags, the kind you find filled with forty pounds of material stacked on pallets in the parking lots near the garden centers of places like Bargain City and Sav-a-Lot.
As it turns out this customer, Peerless Manure, had lost its inventory and receivables financing after failing to meet loan covenants related to eroding equity. Peerless found itself up “the” creek.
It was Harvey’s task as Peerless’s largest creditor, and also being local, to organize and oversee a creditor committee to pursue the takeover of Peerless as its receiver. Then, managing this committee, Harvey was to lead the effort to collect Peerless’s receivables and pay the bank eighty percent of these collections against the remaining outstanding debt, as required in the loan agreement. The remaining twenty percent was to be distributed, pro-rata, to the Peerless creditors.
This would return the creditors less than their due, yet a modestly acceptable amount. This also would put Peerless out of business and personally bankrupt its owner, Melvin Short.
Melvin Short was an athletic gentleman of average height. He was very intelligent, and quite handsome. He had absolutely no taste in clothing, but thanks to his wife Lucretia he dressed well. Melvin was a self-centered chronic philanderer, but he was an excellent provider and went to church every Sunday; coincidentally, the same church as Harvey. Melvin was always one of the stars of the annual blackface show, where he often managed to seduce the more alluring distaff participants into a bit of post-rehearsal congress.
Melvin was his own company’s best salesman. He was always prompt, and patient when forced to wait for lengthy spells in the lobby when visiting chainstore buyers upon whom he often called. In his personal life, though, he was a radical “A personality” who had zero patience for anything. He was always late for family and personal functions, often very late. He was a terror on the roads as his wild impatience had him on edge all the time. He never hesitated to go around other cars in the most extreme ways; up curbs, in the oncoming lane at stoplights, even intimidating them to move aside; although, he never honked his horn (or used turn signals).
Growing up, his son Melvin, Jr. became conditioned to the fact that the roads and highways were battlegrounds with frequent episodes of road rage including the other drivers who became wildly nonplussed by Melvin’s antics.
That said, Melvin got away with all of this as, like some extreme narcissists, he was one of the most charismatic individuals one would ever meet. Driving, he got stopped by the cops perhaps an average of once every two weeks. But he never got tickets. He always managed to bond with the cop, get into lovely personal conversations, and end up walking. And he got away with virtual murder in his philandering ways and how he treated Lucretia, who was hynotized by Melvin’s charm.
Lucretia owned and operated a millinery store in the same building as Peerless. Lucretia loved to purchase inventory. In fact, she loved to purchase anything. Her philosophy in life had always seemed to be if she had checks, she had money. Her store had enough inventory for five years of sales, no less than twenty times a prudent amount.
Lucretia’s store, “Hat Heaven” did a respectable amount of business. Yet it in no way could support Lucretia’s inventory purchases, and her other personal spending. Melvin supported most of this out of cash reserves at Peerless. Hence the equity erosion.
Melvin Short, Jr, or Junior for short, was a young entrepreneur who worked long hours in his own business. He also worked long hours doing those things young men did recreationally, including healthy female accommodations. Overall, Junior was a fairly solid young man with a knack for problem solving.
When the whole Peerless issue came about, the normally assertive Melvin turned soft. He was approaching age sixty and was overcome by a rush of fear over the idea of losing his business, his personal fortune and his way of life. Plus, the thought of having to start over in his declining years mortified him.
Lucretia was oblivious to it all, and carried on with her business; she still had checks. After weeks of hearing about his father’s plight and of Harvey’s move to take over, Junior offered to help the old man. Melvin was in no condition to refuse, and ostensibly turned the keys to Peerless over to Junior and within days took off for Miami, where he and Lucretia possessed a condo.
So, it was up to Junior to deal with Harvey and all the other rats digging in the garbage. And, ostensibly, he had no time. Harvey was scheduled to visit the following week to take control of Peerless.
What to do? Junior was smart, and he had gotten off to a great start in his own business which he had founded at age twenty. Fortunately, he was smart enough to know he wasn’t smart enough to handle this situation without counsel.
Upon referral from a friend, Junior contacted attorney Gordon Levinsky who agreed to meet the following Monday. Gordon had been a bookseller until age thirty-five before deciding to go to law school. He had been practicing business law for six years. Through the tutelage of Gordon’s brilliant, devious, and amoral suite-mate Aaron Cohen, Gordon had reached a certain level of proficiency in bankruptcy law.
Junior met Gordon at his downtown office on the sixth floor of the shabbiest of the venerable high-rises in the city. Gordon, a nervous sort, never sat. He spent an entire hour pacing back and forth, pointing his finger at the stained ceiling tiles, verbosely pontificating about the law; in this case, bankruptcy law. Junior was okay with this. Gordon was entertaining. And Junior soaked up everything Gordon said.
“What if my dad just tells Harvey to go jump in the lake?”, Junior said.
“Harvey can get with two of the other creditors to file for involuntary bankruptcy and ask to appoint a receiver.”
“How can we buy time?”
“You could maybe negotiate to make partial payments, but it’s too late for that if Harvey is coming this week to take over the receivables and bank accounts.”
“If they file for involuntary bankruptcy against Peerless, won’t things get tied up for a while, give us some time?”
“Not likely. The judges in bankruptcy move swiftly. Time is of the essence in bankruptcy proceedings, at least until things get into the hands of a receiver.”
“What happens then?”
“Usually the receivership is run by lawyers who slow things down and suck the assets dry by churning their fees.”
“So everyone loses, except the lawyers.”
“You got it.”
“Ugh. What if I was able to buy a couple weeks from Harvey so my dad can draw out at least some funds before we lose control?”
“He could, but that would be treated as a preferential payment in bankruptcy. The receiver would sue to recover it.”
“Would the receiver be successful?”
“Yes. Bankruptcy law states that anything paid to an insider, and your dad is an insider, can be pursued if within one year of the bankruptcy.”
What if he pays others?”
“If they are not considered insiders, the court can still go back four months.”
“What if my father pays his own creditors versus Peerless creditors, like his Florida condo mortgage?”
“No doubt your father would be forced into bankruptcy and the receiver would sue to recover payments on the mortgage and others, if the payments were made within four months. That aside, did you just say your father’s condo is in Florida?”
“In Florida personal bankruptcy, the person filing keeps their house. So if your dad pays on his mortgage and then can buy four months before bankruptcy and then show he’s otherwise uncollectible, it won’t be worth the time for anyone to even force his bankruptcy. And he’d keep the condo.”
“Whoa. That’s great, except we would need to find a way to keep Harvey and the creditors from taking over long enough to collect receivables, move the money to my dad, pay off his mortgage, and buy four more months.”
“That’s right. And that seems impossible since you’re meeting with Harvey tomorrow to turn over total control of the company assets. I’m sorry, but it sounds as if you and your dad are stuck.”
Junior left the meeting much better informed but greatly discouraged.
The next day, Junior was scheduled to meet with Harvey at Peerless’s offices at three. Junior got up very early and went to his own office to get some work done and then visit with his team on day to day matters. He then headed to Peerless, where no employees remained. It was late morning.
There he sat, at a desk in the open bullpen outside an L-shaped array of private offices that once housed the heads of logistics, operations, and finance, along with a conference room and his father’s office in the corner. Junior had, early-on in his career, developed a superstition about offices; the larger and fancier the office the less the chances of success. So Junior felt most comfortable sitting there in a secretary’s chair at a well-used metal desk in the open work area.
But, what to do? He was sitting on over two million in receivables, all due within the next thirty days. Eighty percent of any collections would go to the bank. Business had ceased, thanks to the bank and Harvey. The entire Peerless team was permanently laid off. Harvey was due to arrive in a little over three hours to take control of the books, the bank accounts, the receivables, everything. It would all be over and Junior’s father would be out of luck; no income, no measurable assets, no future.
There Junior sat, a young entrepreneur with precious little experience, the newly commissioned master and commander of this swiftly sinking vessel. The howling beasts were charging in and he had no answers.
But Junior’s greatest strength was figuring things out and getting stuff done, often for others. In college, many times he would get a call from his girlfriend late at night, panicked over the need to write a theme or a book review due the next morning. Junior thought back to when she needed an original theme on the play “Raisin in the Sun”. She had nothing. Junior had never read it. He asked his girlfriend what she knew and then proceeded to dictate, over the phone, a complete paper start to finish in one final draft. Her girlfriend received an “A”.
In high school, Junior’s friends had always leaned on him to resolve stuff and communicate with the adults. His one friend had yearned for a particular water ski, but it was sixty dollars. That was way too much for him to afford. Junior contacted the manufacturer and managed to become a distributor, receiving fifty and twenty-five off. This meant he got half off retail plus another quarter off the remainder, which was distributor pricing; twenty-two fifty for a sixty dollar ski.
Junior even solved problems for his parents. When he was eight he was following his dad playing a golf tournament for a lot of money. His dad apparently hit out of bounds, as confirmed by the other members of his group. But Junior stopped his dad from returning to the tee to hit over and got another kid to stand in front of an out of bounds stake in the distance, and proved to the group that his dad was inbounds. This made the difference in his dad winning the tournament.
But the Peerless situation was not just a matter of writing a theme or faking out a water ski company. This involved a huge amount of money, sophisticated adversaries, federal judges, and no time to deal with it all.
Junior sat, paced, sat some more, and paced some more. At 2:30 he still had nothing. He kept going over in his mind the discussions with Gordon; bankruptcy laws, preferences, creditor committees, federal judges, receivers, put a paper bag over your head and cluck like a chicken. Ugh.
Then, slowly yet suddenly, a crazy idea started to creep out of his subconscious mind. They say the subconscious mind has two hundred and twenty thousand times more data processing power than the conscious mind. The wheels were turning.
At that moment, the entrance door opened, and in tripped the hulking, clumsy figure of Harvey Minschew. Junior observed that Harvey was wearing a rather dated gray worsted wool suit, a cheap looking white dress shirt with a frayed collar, and a droopy blue and yellow paisley bow tie. His black wingtips were decidedly worn and unpolished. Junior, for whatever reason, had become oriented to observing everything he could about his “adversaries”; their movements, how they talked, how they dressed. This was a guy who was “rode hard and put away wet”, as they say.
“Good afternoon, Bill. It looks rather lonely here. I’m sorry things didn’t work out for your dad. He’s a nice man.”
“Well, should we get started?”
“Sure. Let’s sit down in the conference room.”
Harvey had a large case full of documents and such stuff that he laid out on the table. Junior had no items, no documents, no notepad or pen. He was prepared.
Harvey proceeded to go through the plan for the creditor committee. He explained that he had been in touch with the largest twenty-three creditors, owed between five thousand and seven hundred thousand dollars, the latter being Acme. He explained that this day he would take possession and control of all of the receivables and related records, and gain sole access to all bank accounts which he would close and replace with a single new receiver’s account that he would manage and control. There would be no further compensation made to any Peerless employee, including Junior and his father.
Harvey would be the Chairman of the creditor committee and the official receiver. There were other details as well, everything spelled out in a receivership agreement that Harvey had drafted. Junior, having power of attorney, could execute on behalf of Peerless. Really, all he had to do was sign the document and then assist in gathering up any remaining items for Harvey to take.
Harvey slid the agreement across the table in front of Junior, signature location clearly marked. He slid a pen across as well, sat back, crossed his arms, and waited for Junior to review and sign.
Junior picked up the document, leafed through it a bit, and then placed it back on the table. He looked up at Harvey and said, “Harvey, this is all great. It is as we had discussed. But I’d like to run another possibility by you before I sign.”
Harvey sat back up and leaned a bit across the table. “What do you mean? We already have this worked out.”
“I just want to make you an alternate offer just to see what you think. If you don’t like it, I’ll sign the receivership agreement and we’ll be finished.” Junior had no intention of signing the agreement.
“Well, if you put it that way I would be rude not to listen.”
“Thanks. I got to thinking that, other than receivables mostly obligated to the bank, plus a little cash, furniture, fixtures and equipment, the only substantial asset Peerless has is its inventory of plastic bags. Acme produced those bags. They are, figuratively, yours until we pay for them. Our bag inventory is one point two million. We owe you seven hundred K. What if we were to assign these bags back to Acme? After all, you made them. One point two million to settle a seven hundred K obligation.”
There’s a hackneyed expression for how Harvey looked at this moment, but applicable. He was a deer in the headlights. He slowly reclined back again, and appeared to be contemplating Junior’s offer. His lips slowly moved, with no sound. His gaze was across the room and toward the ceiling, yet as if he was seeing nothing. Harvey sat like that for what seemed an eternity, then straightened up. He looked at Junior and repeated, “You sign over all of the Peerless inventory, Acme credits you for the seven hundred thousand, and I would need to refer a few of your largest remaining creditors to take over for me as receiver.” It wasn’t posed as a question, but it was.
Harvey leaned back again, put his right hand to his chin and slowly wiggled his index finger between his closed lips. “I think we can make this work. Give me two days and I’ll get back to you.”
Junior received a call from Harvey almost twenty-four hours to the minute after Harvey had left Peerless. “How about I stop by tomorrow morning at ten and we wrap this all up?”
“Works for me.”
“See you then.”
“Okay.” Junior hung up and wondered what “this all” was that was going to get wrapped up.
At ten o’clock sharp the next morning Harvey lumbered through the front door, nodded to Junior who was sitting in his usual spot and, without speaking, continued straight into the conference room where he dug a few docs out of his case and laid them on the table. Junior followed Harvey in and sat.
Harvey said, “Okay, I’ve produced all the necessary documents.” Sliding the docs one by one across the table, Harvey continued. “Here is the agreement for Peerless to assign all inventory to Acme. It’s simple and clear. You just have to sign and I’ll witness. Next, here is Acme’s credit to Peerless for seven hundred thousand dollars. And, finally, here is a list of the largest creditors. The three highlighted at the top are expecting your call. All you need to do is execute the inventory assignment agreement and we’re through.”
Without looking at Harvey, Junior signed the agreement. He had brought a pen. He slid the document back across the table, looked up, and said “Thanks, Harvey. It was a pleasure to do business with you.”
They shook hands and Harvey promptly exited. Junior sat back and thought “Okay, step one successfully completed. Now how to accomplish step two?” Junior picked up the invoice credit from Acme and walked out of the conference room, leaving the creditor contact sheet behind. He had no intention of calling them. Junior needed to think.
As it turns out, Harvey did the thinking for Junior later that day or evening. Junior received a call at home from Harvey at seven the next morning. “Junior, this is Harvey.” Without waiting for Junior’s acknowledgement he continued, “I’ve been thinking and I’d like to handle all communications with the creditors, including with respect to the creditor committee.”
“Okay”. Junior didn’t inquire as to why.
“So you’re okay with this? No questions?”
“Okay. No questions.”
“That’s great. Listen, it may be a while before the creditor committee gets going. In fact it might be a few months. But I’ll manage everything.”
Bingo!, Junior thought to himself. He took a few seconds to get composed. “Harvey you’ve led us to this point so it makes perfect sense that you lead us all the way.”
“Great. I’ll be in touch.”
Four Months Later
“Peerless Manure”, Junior answered.
“Hello, this is ABC Logistics calling. It seems you are a hundred and twenty days past due on our last invoice for a little over four thousand dollars. We’ve been very patient, but need to get this handled. Can you send us a check today?”
“To be honest, I’m not with Peerless. The business is shut down. I represent the IRS. We’re actually just in the process of moving out the remaining furniture.”
“Oh my goodness!” There was a pause. “Well, I guess there’s nothing you can do for me. Thanks, anyway.”
Junior hung up and chuckled. He was a devious sort, but never in a malicious way. He just couldn’t help but laugh at the whole situation. Anyone would have to admit, it was pretty funny.
As it turns out, Junior had managed to collect most of Peerless’s receivables within a month of his pivotal meeting with Harvey. He had paid the bank their eighty percent, and sent most of the rest to his dad. His dad was able to pay off the condo in full and sequester a few bucks to enable him to restart his life. He would manage to get through another month before any threat of personal bankruptcy loomed, getting past the preference period for the mortgage payoff. He would not have to file for bankruptcy.
Melvin and Lucretia had agreed to a divorce a couple months earlier. Junior managed to slide some funds over to Hat Heaven so Lucretia could temporarily continue her inventory buying madness and salve the sting of divorce. But that was about to come to a crashing halt. Fortunately, Lucretia had enough inventory she could liquidate to live well for a long time.
As for Harvey, after he and Junior had concluded their business that last day together it suddenly hit Harvey that Acme was now the subject of a preferential payment, a big one. Harvey knew bankruptcy law and knew he needed to stall four months before a bankruptcy judge got hold of it all. So he was forced to be a shill for Junior and Peerless and hold off the other creditors. Given the stature of his company and his prior position as head of the creditor committee that never was, Harvey had no problem doing this.
This gave Junior time to work unencumbered to collect Peerless receivables and bail out his family. So, notwithstanding the other creditors, it was a happy ending for Peerless, Melvin, Lucretia, Harvey, and Acme.
Or was it?
Poor Harvey, always a slow thinker, had not given consideration to the fact that one point two million dollars worth of Peerless Manure bags were no longer worth one point two million dollars. He had put Peerless out of business. Peerless never sold or produced another bag of manure. No one else would have wanted plastic manure bags with the Peerless brand on them. As Harvey had yet to intuit, the bags were worth no more than what he could get for scrap.
After the dust settled Harvey managed to keep his job, albeit with a pay cut. The slightly more important cases returned to outside counsel. Junior returned to his business and youthful female accommodations. Lucretia got the condo in the divorce and hauled her inventory to Florida where she started “Miami Hatworld”. She used the cash flow from the new business to continue to feed her purchasing obsession. Melvin launched a successful new business with his much younger hot new wife. His extracurricular congress continued.
As the poet said, “After changes upon changes we are more or less the same, after changes we are more or less the same.”