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| | Chapter 11 Keeps Carrier From Collecting By Robert Warne - December 31, 2003 With the Department of Insurance (DOI), State Fund and an array of creditors, including the IRS, breathing down CheckMate Staffing’s neck, the company ducked into a bankruptcy court Monday to obtain some Chapter 11 protection.
CheckMate has definitely hit its share of low points in the past few months since its corporate inception in 1991.
In November, the DOI and San Bernardino County investigators raided 22 of CheckMate’s California offices in conjunction with an insurance fraud investigation.
And earlier this month, CheckMate agreed to settle a dispute with State Fund for $7 million in owed premiums.
Checkmate bankruptcy attorney Marc Winthrop told the Los Angeles Times, “This was done because of the prospect that either the State Fund or the IRS might take hostile action in an attempt to shut the companies down."
Chapter 11 will guard CheckMate from its creditors and allow it to continue operating while it reorganizes and comes up with a plan to satisfy its $52 million debt load. The filing may throw a wrinkle in State Fund’s ability to collect the $7 million because the carrier will have to get in the back of the line with the unsecured creditors, but it has no bearing on the DOI’s ongoing investigation into CheckMate’s alleged workers’ compensation fraud for misclassifying and underreporting its payroll.
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