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Barry Olson, a former president of ECG, is the opening bidder for ECG. The company is set to be auctioned in bankruptcy court on Jan. 23 with an opening bid of $7.5 million. Ehrenberg said he chose Olson "given his prior involvement with the company and his prior knowledge of the company." Ehrenberg said the situation called for quick action.
Under the deal, Olson would buy all the assets of ECG including its software, hardware, personal assets located in offices, customer lists, and goodwill. "The idea being that he would pick up the contracts and continue to service them," Ehrenberg said.
Ehrenberg also said he approved interim measures to allow companies to pay employees and keep them on the job.
As for payments made by customers through ECG, billings had not gone out for December yet but those can now be paid through Olson's new entity, Ehrenberg said. However, if earlier deposits were made and swept by Axium's lender (ECG's parent company), that money is gone, he said.
Olson could not be reached for comment.
The potential sale to Olson has already been opposed by the Allegis Group Inc. In a court filing, the company said it was interested in buying all or part of ECG's assets and that it's unknown whether a sale to Olson will affect the rights of ECG clients and debtors.
ECG filed for Chapter 7 bankruptcy Jan. 9 in Los Angeles. Its parent, Los Angeles-based Axium International Inc., filed for bankruptcy on Jan. 8. According to court filings, ECG had 390 full-time employees at one time and managed 100,000 contingent workers daily. Axium bought the Chimes VMS from Computer Horizons International Inc. in February 2007 for $80 million.
Wednesday, the Los Angeles Times reported that investment firm GoldenTree Asset Management sued Axium's owners, John Visconti and Ron Garber, and their ex-wives claiming they used Axium funds as their "own personal piggy bank" to lease private jets and luxury cars such as Rolls-Royces and Aston Martins.