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First meeting of creditors held in Classy Dame bankruptcy

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by Karen E. Culp

SBJ Staff

A first meeting of creditors was held Dec. 8 in the Chapter 11 bankruptcy case of The Classy Dame, a 23-year-old Springfield retail store.

The Classy Dame filed for court protection from its creditors Oct. 30. Terry Heitman and his mother, Betty Heitman, are co-owners of the business. The pair formed the partnership to own the business in April of 1997; prior to that, Betty Heitman had been the sole owner.

The store, which sells women's apparel and shoes, plans to stay open, Terry Heitman testified at the creditors' meeting.

He said that what led to the business' filing was its moving to a new location and adding more merchandise to the larger space. The store also began selling shoes, a venture it is not likely to continue, Heitman said.

The business plans to reorganize, Heitman said, and it is possible that the company will seek additional capital for its operation.

Jerry Phillips, U.S. trustee, asked about a $15,000 loan taken out in September 1997. The company borrowed the money from Community Investment Alliance, of which Robert Mahoney is the owner.

Greg Spencer, an employee of Community Investment Alliance, then left the company and opened his own company, taking the Classy Dame loan with him into his new business.

"It was my understanding that Mr. Spencer assumed responsibility for that loan himself when he opened his new business," Heitman said.

Phillips questioned whether the lender had a secured interest. Heitman and his attorney, David Schroeder, were not certain of the nature of the loan, but Dudley Martin, an attorney representing a creditor in the case, presented a UCC filing from the Missouri Secretary of State's Office that showed the note between Community Investment Alliance and the Classy Dame was secured by the furniture, fixtures and inventory of the business.

Schroeder was to research the note and ascertain whether Spencer now has a secured claim in the bankruptcy case.

Heitman also testified that The Classy [[In-content Ad]]

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