Judge: Expert to examine Gainey Corp.

GRAND RAPIDS, Mich (WOOD) - Though the trustee representing the federal government in the case called it "unorthodox," and the banks' attorney described it as potentially "mavericky," a bankruptcy judge has appointed an outside expert to examine Gainey Corporation's finances.

"During the preliminary hearings, the evidence presented by the Debtors and Banks was limited and somewhat incomplete", wrote Judge James D. Gregg in an opinion published Thursday morning. "Further, some 'surprise' facts and issues arose, including whether some of the Debtors' (Gainey Corporation's) expense items were necessary and reasonable and what may have happened to approximately 200 units of 'missing' collateral and the proceeds therefrom."

A hearing is set for January to determine whether the bankrupt trucking giant can continue to use its cash to operate. Gainey currently has Gregg's temporary permission. A judge needs to sign off on the corporation's use of cash because the banks say it's money they are owed.

"After reflecting upon the evidence from the preliminary hearings ... the court has determined that much greater information is required at the final hearing to assist and guide the court in its decision-making process," wrote Gregg.

Gregg has appointed O'Keefe & Associates of Bloomfield Hills to act as an "expert witness." The firm, which also has an office in Grand Rapids, will "examine the Debtors' business operations, financial reporting, management structure, cash flow projections, the possibility of reducing expenses and maximizing income and the continued use, or possible termination of use, of the Banks' cash collateral."

The judge's order comes one day after creditors filed a motion asking the court to stop Harvey Gainey from drawing a paycheck. The motion also questioned Gainey's business practices, claiming his "actions do not appear to be supported by reasonable business judgment."

24 Hour News 8 will continue to track developments in this case and bring them to you on air and on line.