Former Texans CUSO CEO Curley Says He Will 'Vigorously' Pursue $21 Million
More than a month after a bankruptcy court determined that the former president/CEO of Texans CUSO Insurance Group was entitled to $21 million in a wrongful termination case, it appears the fight to collect could linger as Texans Credit Union gears up to appeal.
"We are delighted with the court's ruling. It is gratifying that the judge confirmed our legal positions in numerous lawsuits and arbitrations against Texans," Curley wrote in a statement to Credit Union Times.
On March 2, the U.S. Bankruptcy Court for the Northern District of Texas said Curley has a claim of $21 million, which includes $347,699 for back pay, benefits and prejudgment interest, $441,000 for attorneys' fees and employment arbitration and $156,909 for post-arbitration fees. Curley's case goes back to January 2007 when Texans CU bought the Curley Insurance Group LLC and six other companies from him for $19 million. Curley was also entitled to a $21 million contingent right to an earn-out paid by Texans Insurance.
"In light of the bankruptcy of Texans Insurance Group, we will be vigorously pursuing our claims against Texans Credit Union and Texans CUSO Partners, the owners of Texans Insurance Group," Curley said. "It is high time the board makes the executives responsible for these legal decisions accountable to the members of the credit union."
Alan Busch, Curley's attorney, said "It is unfortunate that the Curleys continue to wait for Texans to honor the bargain they struck on Jan. 3, 2007."
Texans CU said it still stands by its previous assertion that the $21 million is not a judgment and plans to appeal what it calls an "estimation order."
"It is an estimation of the value of the unsecured claim of Kevin Curley for purposes of distribution in the TIG bankruptcy. The court's opinion on the estimation does not order Texans Insurance Group to pay Curley this amount of money," Texans wrote in an April 7 statement to Credit Union Times.
Texans said Curley "will receive his pro-rata share of the distribution, if any, that is made to all unsecured creditors, unless there is a mutual agreement that is approved by the bankruptcy court."
The court's opinion only determines the amount of Curley's claim with respect to the TIG bankruptcy case and does not order that any of TIG's affiliates, including Texans Credit Union and Texans CUSO Partners, are liable to Curley, Texans said. The Chapter 11 process continues for TIG. The insurance CUSO has filed a notice of appeal of the $21 million "estimation order."
According to an employment agreement, Curley was to continue working with the new CUSO from Jan. 1, 2007 to Dec. 31, 2009. A clause prevented Texans Insurance from terminating him prematurely except for, among other things, willful or negligent conduct.
According to a July 2008 arbitration letter, Curley was terminated for several reasons, including insubordination. In July 2008, an arbitrator determined that Curley was entitled to back compensation.
In September 2009, Texans CUSO Insurance Group filed for Chapter 11 bankruptcy and is in the midst of reorganizing. In June 2009, a Texas arbitrator issued a determination on June 16, 2009, that the CUSO owed $6.2 million to Curley.
"With this decision we have won eight consecutive legal decisions, including two wrongful terminations and three accounting arbitration decisions including two appeals by Texans since 2007," said Curley. Despite spending millions of dollars in legal fees and using five different law firms, Texans has lost every single legal decision."
Texans CU did not respond to Curley's comment and did not provide a figure on how much the cooperative has spent on legal fees in this case.