Nearly three weeks after a legal feud between brothers over the assets of a family trust resulted in the abrupt shutdown and firing of all employees at CoreFund Capital, a Texas-based factoring company, court-appointed receiver Timothy Hassenger is working on getting hundreds of truckers’ accounts receivable paid.
When CoreFund ceased responding to phone calls or emails from desperate truckers after the office went dark on July 18, some small-business truckers were forced to shut down or couldn’t pay their drivers or buy gasoline.
Hassenger and former employees have returned to the workplace since Parker County, Texas, District Judge Graham Quisenberry named Hassenger as the receiver for CoreFund last week, trying to “reestablish the CoreFund activities.”
Michelle Buckalew, managing director of public relations firm Sunwest Communications, stated on Friday that CoreFund is “fully operational,” as Hassenger and CoreFund employees work to address “customers’ needs and provide them with cash flow solutions and the level of care and service they deserve.”
Buckalew was hired to address carriers’ concerns in collaboration with CoreFund’s communications staff and the receiver.
Buckalew stated in an email to FreightWaves that CoreFund is solvent and intends to remain in business when the truckers are paid.
She stated that Hassenger intends to free the carriers who wish to switch factoring companies, but that “many are preferring to stay with CoreFund.”
Some carriers voiced concern that if they continue to work with CoreFund, they will find themselves in the same scenario in a month or two if the rivalry between Meir “Shim” Sacks and his younger brother, Yaakov “Jacob” Sacks, is not resolved.
“The brothers cannot cause disruption while the company is in receivership,” Buckalew explained.
What’s the deal with the feud?
Shim Sacks launched CoreFund Capital in 2014, according to court filings. GMA Fund LLC, the holding company for the Shim Sacks Family Legacy Trust, which he established in October 2014, is a completely owned subsidiary of CoreFund.
Shim Sacks granted Jacob Sacks specific appointment rights as part of the initial trust.
On July 12, Jacob Sacks “executed this exceptional power of appointment he holds” under the original trust and transferred the trust’s assets, including the holding company that controls CoreFund, to a new trust he established, the Sacks Family Grandchildren’s Trust, according to court records.
According to court documents in Pennsylvania, where both brothers live, Jacob Sacks and his company, Sacks Medical Corp., pleaded guilty in federal court in February 2010 to money laundering and breaking federal drug laws.
The Fort Worth, Texas-based law firm Warren Fonville, which represents the younger Sacks, did not respond to FreightWaves’ request for comment.
Shim Sacks did not respond to a request for comment from FreightWaves.
Unlike the previous trust, which only identified Shim Sacks’ children as beneficiaries, the new trust names both brothers’ children as beneficiaries. It also appoints CoreFund’s longtime president, Bonnie Castillo, as the firm’s sole manager.
It is unknown why Jacob Sacks established the new trust.
What occurred?
Truckers were slapped with a double whammy when CoreFund went dark in mid-July and no one was in the office to release them from the factoring company’s UCC-1 (Uniform Commercial Code) liens on their assets. They also required the revocation of a notice of assignment, which is delivered to the truckers’ clients and instructs them to pay CoreFund, who then pays them.
Jason Medley, a partner in the Houston office of legal firm Spencer Fane, is representing over 100 trucking companies affected by the CoreFund stoppage.
According to him, the CoreFund issue is unusual in the factoring sector.
“This is definitely a changing target,” Medley remarked in an email to FreightWaves. “We are allowing the receiver’s personnel and the CoreFund staff (many of whom we are told returned to work under the pending receivership) time to access the computer systems and review the list of our carriers, which now numbers slightly more than 100.”
Medley stated during a status meeting with factoring businesses, attorneys, and truckers via videoconference on Wednesday that carriers simply want to go back to work, even if that means leaving CoreFund for another factoring provider.
“We just need the drivers released so they can move loads and be paid,” Medley told FreightWaves. “The world already has enough supply chain issues. And there are a plethora of excellent factoring companies ready, willing, and able to pick up the pieces. We simply need to allow them to do so.”
He cautioned factoring companies to exercise caution if they chose to fund truckers due to the UCC liens and notice of assignments that are still in place with CoreFund.
Buckalew concurred.
She stated that CoreFund intends to release carriers who wish to find a different factoring provider, although this may be problematic for companies who already factor CoreFund drivers’ accounts receivable.
“CoreFund’s UCC statements remain in effect, and any factoring business that makes a loan is in a second lien position,” she explained to FreightWaves.
