Insiders are telling Insider Louisville to expect major changes at Peritus Public Relations, including a possible internal buyout.
Those insiders say the company saw the departure of Peritus co-founder Bob Gunnell, who started a competing public relations firm, Boxcar PR.
Insider Louisville broke that story last Monday.
Gunnell created the limited liability corporation as Boxcar Strategies Oct. 31, 2011, according to documents filed with the Kentucky Secretary of State.
That was just a few days after Gunnell filed in federal court for Chapter 7 liquidation on October 24, according to federal court documents.
According to those court documents, Gunnell still owns 25 percent of Peritus, a stake the court assigned a value of about $487,900, but with liabilities of $572,534.
From the court documents:
- 25% ownership of Peritas (SIC) Public Relations LLC (assets include office furniture, office equipment, goodwill, accounts receivable, checking accounts and artwork and other assets totalling approximately $487,868 according to an August 2011 balance sheet and liabilities totaling $572,534.00 which includes account payables, bank loans, and other misc. misc. debts); book value is to be determined based on a current balance sheet; company will continue to operate without the debtor’s involvement so value is unknown without his participation in the operations.
But insiders tell Insider Louisville two groups are vying for Peritus.
Multiple sources say Peritus CEO Tim Mulloy and his brother Mark Mulloy, who is listed as senior partner, are trying to buy Gunnell’s share in Peritus out of the bankruptcy proceedings.
The Mulloys also are concerned that Gunnell has started a competing business after signing a non-compete clause in the original contract when Peritus was formed, sources said.
But those sources confirmed that another internal group led by Peritus Senior Strategist Scott Jennings also is making a run at seizing Peritus. Jennings came to Peritus after working as a congressional liaison for President George W. Bush, and as an advisor to Bush strategist Karl Rove.
Whether Peritus will stay intact or be replaced by a new entity is unclear, those sources say.
The Mulloys and Gunnell formed The Commonwealth Group, a Kentucky lobbying firm, in 1989 after the Mulloys ended their partnership with George Williamson in the Williamson Mulloy Group real estate firm.
The Commonwealth Group evolved into Peritus, which moved away from lobbying into strategic counseling and communications, according to the Peritus website. The firm, based at 200 S. Fifth St. downtown, has satellite offices in Lexington, Ky., Nashville, Indianapolis, Columbus, Ohio, and Birmingham, Ala.
Peritus quickly attracted a high-profile client base including 21c Museum Hotel, the now defunct Museum Plaza project and the University of Louisville Foundation. The firm had gross revenue of more than $3 million in 2010, according to Business First’s Book of Lists.
But an examination of Gunnells’ bankruptcy documents and related suits in Jefferson Circuit Court seem to indicate severe financial stress long before his bankruptcy filing.
The filing lists Gunnell as having 1 to 49 debtors, assets of $100,000 to $500,000 and debts of $1 million to $10 million.
The bankruptcy filing lists the top secured creditor as the the Internal Revenue Service, which has a $301,000 tax lien against Gunnell.
Related to the IRS lien, Louisville law firm Fultz, Maddox, Hovious & Dickens and attorney Greg Hovious separately are listed as trying to recover about $46,000 for legal work dating back to an alleged default by Gunnell on a $400,000 promissory note and the IRS tax lien.
In a suit against Gunnell by Fultz, Maddox, a chain of email exchanges between Greg Hovious and Gunnell takes on a personal tone after Hovious accuses Gunnell of reneging on multiple promises to pay his legal bill.
“It’s very important that I get paid ASAP because I’m tired of my partners busting my balls over it,” Hovious wrote to Gunnell in a June 23, 2010 email that was admitted into evidence.
The Fultz, Maddox claim for legal services became an unsecured, non-priority claim after Gunnell sought bankrutpcy protection from creditors.
Gunnell also lists Goldsmith Enterprises at 143 W Market Street for $22,771.00 loan on an automobile. Goldsmith typically makes high-interest, high-risk loans to borrowers with credit histories that make them ineligible for conventional secured bank loans.
Debtor income details from the bankruptcy shows Gunnell’s gross income for April 2011 through September 2011 as averageing about $16,000 per month. His expenses including credit card and mortgage payments were listed as averaging about $9,400 per month for a net average income of about $6,580, according to court documents.
From court documents:
$150,044.00 2011 YTD Mr. Gunnell from distributions from Peritas before business expenses;
business expenses are anticipated to be approximately $94,000 for an overall net
annual YTD income of $55,000.00; business expenses are based on an average
of last two years’ business expenses
$94,968.00 2010 Income from line 22 of 1040 tax returns; K-1 gross income from Peritus
was $201,000 but after expenses and other tax deductions, the net income was
$106,558 which was the carry forward to Schedule E on the 2010 return
$55,455.00 2009 joint income from line 22 of 1040 tax returns