DANVILLE — A local Anheuser-Busch distributor on Friday filed a Chapter 11 bankruptcy petition in U.S. bankruptcy court in Danville, seeking to reorganize its finances.
A week prior, a Vermilion County Circuit Court judge approved the sale of Earl Gaudio & Son Inc. to Skeff Distributing Co., a Decatur-based Anheuser-Busch distributor, according to Vermilion County Court records.
The county court documents said the sale of the corporation, at 1844 Georgetown Road in Tilton, is expected to be finalized by the end of the year as the parties are working out the details.
The circuit court is involved in the sale of the corporation as the result of Earl Gaudio, 91, of Danville, filing a motion in early June requesting a preliminary injunction to remove Vice President Dennis Gaudio and Chief Operating Officer and General Manager Eric Gaudio as directors and officers of the corporation because they violated their fiduciary duty to the business, the court records say.
Earl Gaudio & Son Inc. is a longtime Danville-area distributorship with its roots in southern Illinois.
Earl Gaudio moved to Danville and established the Anheuser-Busch distributorship here in 1956, following in the footsteps of his father, Charles Gaudio, who started a distributorship in southern Illinois in 1904.
Earl Gaudio was president of the corporation until 1997 when his son, Dennis Gaudio, took over as chief operating officer. And in 2005, Dennis Gaudio's son, Eric Gaudio, joined the business as an officer.
All three are currently shareholders of Earl Gaudio & Son. Earl Gaudio owns 78 shares, according to court records, and Dennis Gaudio owns 74 and Eric Gaudio 36.
The motion for a preliminary injunction requested that the court appoint a receiver to do an accounting of the business, recover corporate assets, pay corporate debts and carry on the business of the corporation, including continued negotiations for a sale. Dennis Gaudio and Eric Gaudio already were in discussions about a possible sale of the business when the request for a preliminary injunction was filed in June, according to the court documents.
On June 24, about 12 days after the filing of the request for a preliminary injunction, the court appointed First Midwest Bank as temporary custodian of the corporation and ordered an accounting and audit of the books, records and accounts, and directed that the shareholders, directors and officers of the company not enter the premises without consent of the custodian.
The request for preliminary injunction claims that since 2007, there have been no annual or special meetings of the corporation's shareholders or directors, and Dennis Gaudio and Eric Gaudio breached their fiduciary duty and misapplied and wasted corporate assets damaging the corporation and Earl Gaudio. It also claims that without notice to shareholders, debts and obligations were incurred through mismanagement that cannot reasonably be repaid through continuing operations of the corporation, compelling the sale of the corporation.
The request for preliminary injunction claims several other developments took place within the corporation without notice to shareholders:
— Created and purchased new companies and subsidiaries for the purpose of carrying on business other than the distribution of beverages when the businesses were outside the expertise of management.
— Sold corporate assets, including a warehouse facility at 1644 Georgetown Road in Tilton, and engaged in negotiations for sale of all corporate assets without shareholder authorization.
— On at least 58 occasions, the corporation bounced or failed to pay for product delivered by the corporation's franchisor, Anheuser-Busch, and incurred debts to Anheuser-Busch.
— Failed to pay tax obligations of the corporation, owing the Illinois Department of Revenue $206,979 and the Internal Revenue Service $214,174.
— Failed to pay Anheuser-Busch $405,000 for products and procured a loan for payment to Anheuser-Busch on a personal guarantee by Earl Gaudio, which was secured by "forgery, fraud or concealment."
— Failed to provide shareholders with statements of the business and condition of the corporation since September 2007.
— Following two written demands, failed to "timely" produce books and records to Earl Gaudio.
The bankruptcy court records do not include the corporation's assets and liabilities, and on Monday, a clerk said all of the documents have not been filed yet.
The records do list a number of creditors including Anheuser-Busch of St. Louis, Mo.; Earl Gaudio; the Illinois Department of Revenue; the IRS; Iroquois Federal Savings & Loan of Danville; Mercedes Benz Financial Daimler Truck Financial of Fort Worth, Texas; Mike-sell's Pototo Chip Co. of Dayton, Ohio; Paul Offut of Lebanon, Mo.; Regions Commercial of Birmingham, Ala.; Small Business Growth Corp. of Springfield; and World Business Lenders, LLC, of New York City.
Sue Hofer, spokeswoman for the Illinois Department of Revenue, said Earl Gaudio & Son Inc. is working with the department to clear up the back taxes owed and when that happens, liens against the business will be lifted by the department.
"They are making payments in good faith," Hofer said, adding that the department wants to work with taxpayers, especially when there's a potentially thriving business involved.
According to Vermilion County Court documents in the request for preliminary injunction, the court approved the sale of Earl Gaudio & Son Inc. to Skeff Distributing on July 12. The same day, First Midwest Bank filed a motion asking the court to request that the estate of Earl Gaudio loan the corporation $120,000 for current operating expenses until the sale is finalized. According to the documents, Earl Gaudio approved of the loan provided that the bank pay back his estate upon closing of the sale of the business.