Gainey unable to fill charitable pledges

GRAND RAPIDS, Mich. (WOOD) - The bankruptcy of Gainey Corporation is hitting not just the company but also the community.

The company is making $340,000 loan payments to its creditors each week, and company owner, Harvey Gainey, is not drawing a salary right now, per court order.

Gainey is the lead donor for the new YMCA to be built on Forest Hills Avenue between Cascade Road and Fulton Street in Kent County. The $20 million project was slated for groundbreaking this past spring, and then summer, but never happened.

Officials at the YMCA told 24 Hour News 8 on Thursday that they are finalizing design plans, will move forward and are monitoring the situation.

Gainey pledged $3 million but may not be able to fulfill it.

"It's not due yet," he told 24 Hour News 8.

Is it in jeopardy?

"We don't know."

Have you talked with the YMCA?

"I have."

What have you told them?

"I told them they could delay the time it will be paid to see what happens or they could go look for another lead donor."

Last month, Gainey filed for bankruptcy protection for five of his transportation companies as he tries to restructure them. He did so to fend off a $238 million lawsuit by creditors who say he defaulted on loans.

Gainey just hired a new chief operating officer - Carl Oosterhouse - to help him implement the restructuring. Oosterhouse is a disbarred attorney who is accused of stealing from the Grand Rapids law firm he worked for, Varnum Riddering, and from his main client, Harvey Gainey.

So why hire him?

"Carl had worked with me for 24 years," said Gainey. "Something went wrong there, and I'm not still sure what, but I'm a compassionate man, a Christian man. He is forgiven and he's been told that."

"He was diagnosed with a problem and was treated for it, and to my knowledge he is ok now. Mr. Oosterhouse is probably one of the best strategists I've ever met. He will be a valuable asset to our company in many ways, certainly in formulating operating strategy and administering operations."

People might say, "What is Harvey Gainey thinking?"

"I don't look at things the way the rest of the world does," Gainey said.

So how does Gainey's business look a month into the bankruptcy? He said there is positive cash flow and operating profits.