OCA co-founder asks court to subordinate lender claims in connection with ownership 'scheme'

By Caroline Salls

Pittsburgh, Aug. 24 - OCA, Inc. co-founder and creditor Bartholomew F. Palmisano Sr. filed a complaint against lenders Silver Point Finance, LLC and Bank of America, NA requesting that Silver Point's claims be subordinated in connection with the lender's alleged "scheme to acquire ownership of OCA," according to a Thursday filing with the U.S. Bankruptcy Court for the Eastern District of Louisiana.

Palmisano said the lenders' claims should be subordinated because they have an unfair advantage over other creditors in the case.

According to the complaint, Silver Point acted on non-public, confidential information when it originally acquired OCA debt.

In addition, Palmisano said in negotiating pre-bankruptcy amendments to OCA's credit agreement, including requiring Palmisano "to make and subordinate multi-million dollar loans to OCA," Silver Point did not disclose "its true intent to use the amendments as additional leverage to acquire ownership of OCA at an unfair price."

Palmisano said Silver Point and/or Bank of America pressured OCA to retain Michael Gries as chief restructuring officer before its bankruptcy case.

The complaint said Gries may have ties to Silver Point, and Gries helped Silver Point attempt to acquire ownership of OCA by arranging a debtor-in-possession financing agreement that gives Silver Point control over the company's reorganization.

According to the complaint, Gries also solicited a success fee or bonus from Silver Point that is based on confirmation of a plan or reorganization under which Silver Point will become the majority or sole owner of OCA.

Palmisano said this fee directly violates Gries' duty of loyalty to the company.

Finally, Palmisano said in the complaint that Silver Point and/or Bank of America have worked with Gries to attempt to hide the true value of OCA's assets so Silver Point, as post-bankruptcy owner, will benefit from the claims and the company's other creditors and shareholders will not.

OCA, a Metairie, La., provider of business services to orthodontic and dental practices, filed for bankruptcy on March 14. The Chapter 11 case number is 06-10179.

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