GRAND RAPIDS, Mich. — The former CEO of an Elkhart payroll company has filed for personal bankruptcy, citing over $100 million in debt.
Najeeb Khan, who owned Interlogic Outsourcing Inc., is seeking Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in the Western District of Michigan. Interlogic was recently sold to a Pennsylvania company for $3.5 million, following its own bankruptcy filing and allegations from a bank and former clients who say they are owed tens of millions of dollars.
The company accused Khan of intentional financial mismanagement.
Khan says he has assets valued at between $50 million and $100 million, but values his liabilities in the $100 million to $500 million range, according to his Oct. 8 bankruptcy motion.
The single largest creditor is KeyBank National Association, which has a total unsecured claim of $122 million. The filing notes that the amount is both estimated and disputed.
Other major creditors include a collection of dioceses and archdioceses, owed $1.9 million, and the Commodore Corp. of Goshen, owed $838,291 for unremitted tax deposits.
The filing lists more than 120 companies and individuals as creditors, as well as state and federal revenue departments. Khan also reports an affiliation with 12 entities that have pending bankruptcy cases in Indiana and Michigan, including Interlogic Outsourcing and its related businesses.
In a later motion, Khan asked the court to avoid liens that KeyBank holds on some of his companies, vehicles, aircraft and other property, as well as stock transfers he made to the bank. In the 33-count filing, he also sought to recover from KeyBank the proceeds from the $290,000 sale of an airplane, the $525,000 sale of a helicopter and the $350,000 sale of a storage building owned by companies he’s connected with.
Khan said in the Oct. 17 filing that he informed KeyBank on July 8 that checks deposited with the bank were drawn on an account at a different bank with insufficient funds. He said the bank asserted the overdraw was a breach of the Master Services Agreement with Interlogic, and that the bank required Khan to pledge all of his assets and all assets of various businesses he owns as security for repayment.
He claims this was done even though he had no obligations under the agreement and was not receiving services in exchange.
The judge appointed a Chapter 11 trustee in Khan’s case on Oct. 21. He later denied a request from Khan’s wife, Nancy Khan, to sell their Edwardsburg, Michigan, home for about $750,000.
U.S. Bankruptcy Judge Scott Dales noted in his decision that the bankruptcy case and the debtors are in limbo until Khan can turn over his estate to the trustee.
Also in limbo during the corporate and personal bankruptcy proceedings are a number of lawsuits, including joint claims from dozens of former clients in northern Indiana. Nancy Khan is also pursuing a division of their estate in a Michigan family court.