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AHP Inc. files for Chap. 7 bankruptcy protection

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by Karen E. Culp

SBJ Staff

AHP Inc., or Always Helping People Inc., filed Aug. 5 for protection from its creditors under Chapter 7 (liquidation) of the U.S. Bankruptcy Code.

The case will be heard by U.S. Bankruptcy Court Judge Karen M. See, and a first meeting of creditors is scheduled for 11:30 a.m. Sept. 18, said Thomas O'Neal, the trustee assigned to the case.

O'Neal said that was filed initially in the case was a mailing matrix, and that no schedules or listing of creditors had yet been filed. Dan Nelson, attorney for AHP in the bankruptcy case, said there are a total of 200 creditors.

AHP sells water- and air-filtration systems through distributors, Nelson said. The company sells distributorships to individuals who buy a kit and the right to distribute the product to consumers, Nelson said.

On Aug. 16, 1996, the attorney general's office filed an order approving the Assurance of Voluntary Compliance, which provided for AHP to begin resolving complaints with former distributors, said Scott Holste, spokesman for the attorney general's office.

The attorney general had received contacts from 156 people and those were to be processed for complaint satisfaction.

"Once they began resolving the complaints, they were doing OK for about the first six months until the spring of 1997, then the number of resolutions dropped off," Holste said.

During 1997, the attorney general's office filed four motions to enforce the earlier agreement, and ultimately, on July 24, 1998, filed a Motion to Compel, or alternatively, for a ruling on the company's objections to interrogations and production of documents.

The attorney general had been seeking certain information about the company through the discovery process, and the company had objected to the attorney general's interrogations. A hearing on the matter was scheduled for Aug. 6, but because of the bankruptcy filing, the hearing was not held, Holste said.

The company's financial situation was what led to the bankruptcy, Nelson said.

"It was the overall financial burden and decline in income that led to this filing. It is not fair to say that the activities related to the attorney general's office is the sole cause of this. We're certainly not here to point the finger at the attorney general. The purpose of the filing is to bring the business to a fair conclusion for everybody," Nelson said.

The company has some assets, including equipment and furnishings, and is currently conducting an assessment of its inventory. The number of creditors is also being finalized, along with the total amount owed to those creditors, the attorney said.

Larry Burris and his wife were among the company's distributors who forwarded a complaint to the attorney general's office and ultimately had that complaint resolved. Burris said he was misled by the company's officials, and told that he would have to do very little to earn a lot of money. He said he was assured support that he ultimately found was not there.

"The company wasn't what I was led to believe it was. I did not have the inclination to travel as they wanted me to, being retired, and wound up with a lot of merchandise I couldn't liquidate," Burris said.

Burris received a settlement for his merchandise, he said, and added he feels fortunate he got his money back when he did.

"I am glad we were able to recover our money. We had $18,000 in inventory ... I was relieved to get my money back and sever all relations with the company," Burris said.

The company was founded in 1980 by Larry Holder, and its initial registration report was filed with the Missouri secretary of state in 1981. It lists Larry K. Holder as the president and secretary of the company. The latest report filed with the secretary of state lists Holder as president and treasurer, and Kretia Elmquist as secretary and vice president.

The company ceased doing business at or before the bankruptcy filing and is no longer operating, Nelson said. Its headquarters was at 910 W. Battlefield.

In 1996, the Missouri Attorney General filed an Assurance of Voluntary Compliance in Greene County Circuit Court that prohibited or enjoined certain business practices and that developed a buy-back policy the company was to adhere to.

At that time, the company was to pay restitution of approximately $434,000 by repurchasing unused and unsold inventory of some distributors.

Nelson said the company did operate under the compliance order and "used their best efforts to comply with the agreement." Initially, there were some settlements reached and a certain number of claims were resolved.

The 1996 agreement also required the company to pay $20,000 over 10 months to the Missouri Merchandising Practices Revolving Fund. A portion of that, and some other financial obligations to the attorney general's office, will result in the state also being a creditor in the bankruptcy case, Nelson said.

Under the 1996 agreement, the company was also enjoined from misrepresenting profit levels of participants; from making false claims about past earnings of participants; from making claims about the products' performances that are not backed by science; and from using terms such as "employment," or "salaried positions" in advertisements for distributors.

The 1996 agreement also established a buy-back policy that stated the company shall repurchase unused and resalable products and sales aids which are in the same condition as received, and the repurchase price was to be the full amount paid by the participant in AHP.

To obtain the buyback, the participant had to withdraw from participation in AHP. Under the buy-back policy, AHP also had to refund 75 percent of the participant's application fee. The AVC also placed a $5,000 limit on the amount of money a new participant could invest in the company.

Under the agreement, the company had to disclose the terms of the prohibited acts and the buy-back policy.

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