By Emily Randall
Northeast News
Jan. 6, 2010

It’s been more than three months since community development corporation Old Northeast, Inc. shuttered operations in Historic Northeast, and Chapter 7 bankruptcy is underway on the CDC to pay the currently estimated about $256,000 ONE owes in taxes and to various creditors.

This Friday, all those who are owed money from ONE will have the chance to question the ONE trustee at the informational meeting of creditors at 1 p.m. at the U.S. Courthouse downtown. This is the first meeting in what will be a many months-long process of selling off ONE’s properties and paying off the debts.

Although ONE currently holds $264,306 in assets, the situation is not as simple as using those assets to pay off the debt because much of it is real estate. Hence, the actual ONE assets depend on what those properties will sell for on the market. The ONE building at 6612 Independence Ave. is the most valuable real estate holding, appraised at $189,000, but it may never sell for that much.

“Do I think it’s the value it’ll actually sell for? To me that is doubtful,” said Nancy Jochens, ONE’s attorney. “That’s what everyone’s hopeful will happen.”

ONE Board member Brad Finch said the sinking economy frustrates matters further, as it is an unfortunate time to be selling a property.

“But if it wasn’t such a bad economy, we probably wouldn’t be in this in the first place,” Finch said.

Jochens explained that once the trustee collects all the money that can be collected from ONE’s assets, the first to get paid would be creditors holding claims that are secured with liens. This includes the Internal Revenue Service, which is owed $29,000 according to ONE’s bookkeeping, and Union Bank, which is owed $31,163.

The debt owed to Union Bank was the reason ONE closed and went into bankruptcy in the first place, Jochens said. Union Bank had foreclosed on an apartment building ONE had purchased, and ONE was on a payment plan for its debt owed to the bank. After missing some payments, Union Bank garnished the ONE bank account, which left the CDC with no funds to pay its bills or payroll.

“They just dropped a rock on their accounts receivable,” Jochens said. “Suddenly there was just absolutely no money.”

Although ONE talked Union Bank into releasing enough funds to pay the current payroll, it was a dead end for the organization.

Once Union Bank and the IRS are paid, the law says the trustee is the first to be paid, followed by wages still owed to employees. Nancy Kwilas and Billy Cutchlow are owed $12,500 and $5,500 in wages, respectively.

Next, the taxing agencies will get their money due. According to ONE’s books, the city is owed $539, the IRS is owed an additional $9,100 in this column for payroll taxes, Jackson County is owed $755, and the state is owed $990. All of these dollar amounts, along with all others in the bankruptcy file, are disputable from those who are owed.

At the bottom of the list to get paid are 23 additional companies that ONE owed outstanding bills. These include a $15,000 loan from Central Bank of Kansas City, a $22,600 outstanding balance to American Lawn and Landscaping, $15,000 for the purchase of a copier, a $5,000 water bill, $3,300 electricity bill, $4,700 gas bill and many more. (Full disclosure: the Northeast News is one of these creditors, being owed for ONE’s advertising in the paper.)

“It’s all very unfortunate,” Jochens said. “I’m very hopeful that once some of this old debt is done away with, there will be people in your neighborhood willing to pick up the mantle and go forward.

“It’s very hard these days to do good work.”