2.4.0.8000170 - Disclosure - COMMITMENTS AND CONTINGENCIEStruefalsefalse1false falsefalseD130101_130630http://www.sec.gov/CIK0001167905duration2013-01-01T00:00:002013-06-30T00:00:001true 1fil_COMMITMENTSANDCONTINGENCIESAbstractfil_falsenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse0COMMITMENTS AND CONTINGENCIES:2false 2us-gaap_CommitmentsAndContingenciesDisclosureTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalseterseLabel1falsefalsefalse00<pre>12. COMMITMENTS AND CONTINGENCIES</pre><pre>CONTINGENCIES:</pre><pre>BPI</pre><pre>In connection with Baker's Pride's USDA loan application,  BPI had Environmental</pre><pre>Site Assessments done on the property where the Mt. Pleasant Street Bakery, Inc.</pre><pre>resides as required by BPI's prospective  lender. A Phase II Environmental  Site</pre><pre>Assessment  was  completed  on October  31, 2011 and was  submitted  to the Iowa</pre><pre>Department of Natural Resources ("IDNR") for their review. IDNR requested that a</pre><pre>Tier Two Site Cleanup  Report  ("Tier Two") be issued and  completed in order to</pre><pre>better understand what environmental hazards exist on the property. The Tier Two</pre><pre>was completed on February 3, 2012 and was submitted to IDNR for further  review.</pre><pre>Management's  latest  correspondence  with IDNR, dated March 21, 2012,  required</pre><pre>additional   environmental   remediation   to  be  in  compliance   with  IDNR's</pre><pre>regulations.  Management has retained the necessary environmental consultants to</pre><pre>become  compliant with IDNR's request.  Due to the nature of the liability,  the</pre><pre>remediation  work is 100%  eligible  for refund from INDR's  Innocent  Landowner</pre><pre>Fund. As such there is no direct liability related to the cleanup of the hazard.</pre><pre>TYREE</pre><pre>One of Tyree's largest customers, Getty Petroleum Marketing, Inc. ("GPMI") filed</pre><pre>for  bankruptcy  protection  on December 5, 2011.  As of that date,  Tyree had a</pre><pre>pre-petition receivable of $1,515,401, which was subsequently written-off due to</pre><pre>the  uncertainty  of  collection.   Additionally,   Tyree  has  a  post-petition</pre><pre>administrative  claim  for  $593,709.  A Proof  of  Claim  was  filed  with  the</pre><pre>Bankruptcy  court on Tuesday,  April 10, 2012.  On August 27,  2012,  the United</pre><pre>States  Bankruptcy Court for the Southern  District of New York confirmed GPMI's</pre><pre>Chapter 11 plan of  liquidation  offered by its unsecured  creditors  committee,</pre><pre>overruling the remaining  objections.  The plan provides for all of the debtors'</pre><pre>property to be  liquidated  over time and for the  proceeds to be  allocated  to</pre><pre>creditors.  Any assets not  distributed  by the effective date will be held by a</pre><pre>liquidating  trust  and  administered  by a  liquidation  trustee,  who  will be</pre><pre>responsible  for  liquidating   assets,   resolving   disputed  claims,   making</pre><pre>distributions, pursuing reserved causes of action and winding up GPMI's affairs.</pre><pre>As an unsecured  creditor,  Tyree may never  collect or may only collect a small</pre><pre>percentage of the pre and  post-petition  amounts  owed. To date,  Tyree has not</pre><pre>been  notified  of any  intent by the  United  States  Bankruptcy  Court for the</pre><pre>Southern  District  of  New  York  to  claw  back  any  amounts  paid  to  Tyree</pre><pre>pre-petition.</pre><pre>As of the date of this filing, Tyree management has negotiated  settlements with</pre><pre>Local Unions 99, 138 and 355. Tyree management continues to negotiate with Local</pre><pre>Unions 1, 25 and 200 over unpaid benefits that are due to each of the respective</pre><pre>unions.  As of June  30,  2013,  Tyree  had  approximately  $950,000  in  unpaid</pre><pre>benefits.  Tyree  management does not dispute that benefits are due and owing to</pre><pre>each of the respective unions, however,  settlement and payment plan discussions</pre><pre>are ongoing.  Local  Unions 1 and 200 have each filed suit in the United  States</pre><pre>District  Court  Eastern  District of New York to enforce their rights as to the</pre><pre>unpaid  benefits due and owing from Tyree,  and as guarantor of certain  amounts</pre><pre>due and owing, Amincor, Inc. is also a named party in these lawsuits.</pre><pre>Local Union 200 filed a claim with the National Labor  Relations  Board ("NLRB")</pre><pre>alleging that Tyree Service Corp violated the National Labor Relations Act. By a</pre><pre>letter dated May 31, 2013, the NLRB dismissed all charges  against Tyree Service</pre><pre>Corp. due to insufficient  evidence to establish a violation.  Local 200 intends</pre><pre>to appeal the NLRB decision.</pre><pre>A variety of unsecured  vendors have filed suit for  non-payment  of outstanding</pre><pre>invoices  totaling  approximately  $2.6 million as of June 30,  2013,  which are</pre><pre>reflected as liabilities on the Company's  consolidated condensed balance sheet.</pre><pre>Each of these  actions is  handled on a case by case  basis,  to  determine  the</pre><pre>settlement and payment plan.</pre><pre>ESI</pre><pre>The Volkl license  agreement was terminated in September  2011 and  concurrently</pre><pre>the Strategic Alliance  Agreement with Samsung America CT, Inc.  ("Samsung") was</pre><pre>also terminated. Volkl is seeking a $400,000 royalty payment. Epic has initiated</pre><pre>counterclaims against the various parties, including but not limited to Samsung,</pre><pre>seeking damages for, including but not limited to infringement,  improper use of</pre><pre>company assets and breach of fiduciary duty. Volkl was successful in obtaining a</pre><pre>judgment  against  Epic Sports  International,  Inc. and a  confirmation  of the</pre><pre>Arbitration is presently pending in Federal Court. Management believes that this</pre><pre>matter and the Frost  matter below will  eventually  be settled out of court for</pre><pre>less than the royalty and damages amounts sought.</pre><pre>On September 28, 2012, Sean Frost ("Frost"), the former President of Epic Sports</pre><pre>International,  Inc., filed a complaint against Epic Sports  International Inc.,</pre><pre>Amincor, Inc. and Joseph Ingrassia (collectively,  the "Defendants").  The first</pre><pre>cause of action of the complaint is a petition to compel  arbitration for unpaid</pre><pre>compensation and benefits pursuant to Frost's employment  agreement.  The second</pre><pre>cause  of  action  of the  complaint  is for  breach  of  contract  for  alleged</pre><pre>non-payment  of expenses,  vacation days and  assumption of certain  debts.  The</pre><pre>third cause of action of the complaint is for violation of the California  Labor</pre><pre>Code for failure to pay wages. In addition, Frost is seeking among other things,</pre><pre>damages, attorneys' fees and costs and expenses.</pre><pre>LEGAL PROCEEDINGS</pre><pre>AMINCOR</pre><pre>On July 6, 2012, SFR Holdings, Ltd., Eden Rock Finance Master Limited, Eden Rock</pre><pre>Asset Based Lending Master Ltd., Eden Rock  Unleveraged  Finance Master Limited,</pre><pre>SHK Asset Backed Finance  Limited,  Cannonball  Plus Fund Limited and Cannonball</pre><pre>Stability Fund, LP (collectively,  the "Plaintiffs")  commenced an action in the</pre><pre>Supreme Court of the State of New York County of New York against Amincor, Inc.,</pre><pre>Amincor Other Assets,  Inc.,  their  officers and  directors,  John R. Rice III,</pre><pre>Joseph F.  Ingrassia and Robert L. Olson and various other  entities  affiliated</pre><pre>with or  controlled  directly  or  indirectly  by John R. Rice III and Joseph F.</pre><pre>Ingrassia  (collectively  the  "Defendants").  Plaintiffs allege that Defendants</pre><pre>engaged in wrongful acts,  including  fraudulent  inducement,  fraud,  breach of</pre><pre>fiduciary duty, unjust enrichment, fraudulent conveyance and breach of contract.</pre><pre>Plaintiffs are seeking  compensatory  damages in an amount in excess of $150,000</pre><pre>to be determined at trial. Litigation is pending.  Management believes that this</pre><pre>lawsuit has no merit or basis and intends to vigorously defend it.</pre><pre>TYREE</pre><pre>Tyree's  services  are  regulated  by federal,  state and local laws  enacted to</pre><pre>regulate   discharge  of  materials   into  the   environment,   remediation  of</pre><pre>contaminated  soil and  groundwater or otherwise  protect the  environment.  The</pre><pre>regulations  put Tyree or Tyree's  predecessor  companies at risk for becoming a</pre><pre>party to legal proceedings  involving customers or other interested parties. The</pre><pre>issues involved in such proceedings  generally relate to alleged  responsibility</pre><pre>arising  under  federal or state laws to remediate  contamination  at properties</pre><pre>owned or operated either by current or former  customers or by other parties who</pre><pre>allege damages. To limit its exposure to such proceedings,  Tyree purchases, for</pre><pre>itself  and  Tyree's  predecessor  companies,  site  pollution,   pollution  and</pre><pre>professional  liability  insurance.  Aggregate limits, per occurrence limits and</pre><pre>deductibles   for  this  policy  are   $10,000,000,   $5,000,000   and  $50,000,</pre><pre>respectively.</pre><pre>Tyree and its  subsidiaries  are,  from time to time,  involved in ordinary  and</pre><pre>routine litigation.  Management  presently believes that the ultimate outcome of</pre><pre>these  proceedings  individually  or in the aggregate,  will not have a material</pre><pre>adverse  effect on the Company's  financial  position,  results of operations or</pre><pre>cash flows.  Nevertheless,  litigation is subject to inherent  uncertainties and</pre><pre>unfavorable  rulings could occur. An unfavorable  ruling could include  monetary</pre><pre>damages  and, in such event,  could result in a material  adverse  impact on the</pre><pre>Company's financial position, results of operations or cash flows for the period</pre><pre>in which the ruling occurs.</pre><pre>IMSC/OTHER ASSETS</pre><pre>Capstone  Business Credit,  LLC, a related party, is the plaintiff (on behalf of</pre><pre>Amincor  Other Assets,  Inc.) in a foreclosure  action  against  Imperia  Family</pre><pre>Realty, LLC ("IFR").  IFR is related to the former owners of Masonry's business.</pre><pre>In November  2011 a Judgment of  Foreclosure  was granted by the court  ordering</pre><pre>that the IMSC property in Pelham  Manor,  New York (the  "Property")  be sold at</pre><pre>public auction. As of the date of this filing, the deed to the Property has been</pre><pre>recorded  in the name of  Amincor  Other  Assets,  Inc.  with the  office of the</pre><pre>Westchester County Clerk.</pre><pre>A former  principal of Imperia Bros.,  Inc. (a  predecessor  company of Masonry)</pre><pre>filed a notice of appeal dated  November 14, 2011 with the court  contesting the</pre><pre>Judgment of  Foreclosure.  On June 19,  2013,  the  parties in the above  action</pre><pre>agreed to a settlement in  principle,  which  resolves the  remaining  causes of</pre><pre>action and dismisses  the third party  complaint  and the  declaratory  judgment</pre><pre>complaint, with prejudice</pre>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for commitments and contingencies.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 14 -Paragraph 3 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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