Bixby Leaders Resign Amid Legal Battles
A handful of leaders from Bixby Energy Systems, including CEO Robert Walker, who have come under fire for allegedly mismanaging the company resigned Tuesday from their posts in order to settle two civil lawsuits.
Two of the Ramsey-based company's directors-Gil Gutknecht and James Bergeron-filed a suit in Hennepin County District Court last month alleging that Bixby has been mismanaged and that it needs a receiver to step in and run the company. Bixby develops alternative energy solutions, including the conversion of coal to natural gas.
The suit alleges that Walker-also the founder of Plymouth-based Select Comfort and credited with creating the Sleep Number bed-played a central role in leading Bixby to insolvency.
The suit filed by Gutknecht and Bergeron appears to be one of many legal challenges that Bixby has recently faced. Global Partners Unified (GPU), a Nevada company that has an exclusive contract to sell Bixby's coal-gasification technology in China, filed a separate suit claiming Bixby has repeatedly misrepresented the status of its technology and has accumulated $141 million in losses.
Court filings also accuse Walker of spending his insolvent company's funds on expensive travel arrangements and hiring family members who he overpaid. And the company's financial consultant-Dennis DeSender-was previously convicted of bank fraud, the suits state.
The suit filed by Gutknecht and Bergeron and the one filed by GPU both asked for a receiver to take over management of the company, and Minneapolis-based management consulting firm Matrix Associates, Inc., was chosen on Tuesday to step in following negotiations among the involved parties.
An official document outlining the settlement's terms had not yet been filed on Wednesday afternoon. But David Davenport, an attorney representing GPU, explained the terms of the settlement in a Wednesday phone interview, and he described the resignations of Bixby's leaders-including Walker; Peder Davisson, Bixby's corporate counsel; Kenneth Casavant, board member and Walker's brother-in-law; and Philip Wood, also a board member. Bixby also agreed to terminate its relationship with DeSender.
Davenport also said that an interim board of directors-composed of Gutknecht, Bergeron, and Bixby's Chief Financial Officer Ronald Kinner-will oversee Matrix. Shareholders will elect a new permanent board sometime in July.
As part of the settlement, GPU agreed to provide Bixby with roughly $2.6 million in interest-free loans to be paid directly to Bixby's vendors. This will allow for the orders of five coal-gasification units to be completed despite the fact that “Bixby has no money,” Davenport said, adding that GPU perceives the settlement as “a good step for the future of Bixby.”
A mid-afternoon Wednesday call to Bixby led to a voicemail system indicating that the office was closed, and a phone message was not immediately returned. Henry Feintuch of Feintuch Communications-which previously performed public relations services for Bixby-told Twin Cities Business that his company hasn't worked with Bixby for three months and is awaiting payment for past services.
Although the two civil lawsuits have now been settled and a significant portion of the company's management displaced, Bixby reportedly also faces investigation from the U.S. Securities and Exchange Commission (SEC) and a federal criminal probe.
GPU disclosed in court documents that it received a letter from the SEC in December indicating that the organization is investigating Bixby. The company's suit also claims that Bixby is being investigated by the Internal Revenue Service. The complaint filed by Gutknecht and Bergeron further states that Bixby is the subject of a grand jury investigation, although the details of those investigations have not been disclosed.
Bixby was founded in 2001 and produces and researches alternative and renewable energy, including coal gasification with reduced carbon emissions, coal conversion to natural gas, and liquid fuels.