The chief executive of Jason Pharmaceuticals Inc. met with a chilly reception from suspicious creditors yesterday as he defended hundreds of thousands of dollars in payouts to the founding family at a time when sales of the company's diet products were plunging.
Meeting with creditors for the first time since the Owings Mills company filed for a Chapter 11 bankruptcy reorganization on Feb. 11, JasonPresident James Vitale said he and his family have no intention of pumping additional capital into the company.
He reiterated the company's intention to pay unsecured creditors back fully, but said that could take five to seven years. He said the company had a positive cash flow despite a more than 80 percent drop in sales of its Medifast products over the past three years.
But creditors came out of the meeting "adamant" about going forward with a motion to have the bankruptcy filing disallowed, according to their attorney, Joel Sher of Shapiro & Olander in Baltimore.
Mr. Vitale told them that Jason plans to continue payments of salaries and consulting fees to himself and two other family members.
Mr. Vitale said his own salary would be cut from $275,000 to $125,000, but his sister, Susan Vitale Boone, would continue to receive $75,000 a year as vice chairman and general counsel. In addition, he said, the company will seek the bankruptcy court's permission to continue payments to his father, Dr. William J. Vitale, under a $275,000-a-year consulting arrangement.
Members of the creditors' committee listened quietly to Mr. Vitale, but their attorney said later that they were not impressed.
"There's a lot of Vitales," said Mr. Sher. "We've got too many Vitales."
He said the creditors were discouraged that the Vitales do not plan to put any of their own money back into the business and were concerned about how long Jason is planning to take to satisfy its debts.