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ARC Lifemed8/2/2005
eceived any distributions of their contributions to the Capital Account or an accounting.
16. At all times between October 29, 1998 to January 30, 2001, AMC-TN assured LifeTrust and ARC-LifeMed that LifeTrust that their Initial Capital Contributions were safe.
17. On January 30, 2001, the LifeMed board members met. At that meeting AMC-TN and/or Omnicare representatives presented updated financials for LifeMed through January 2001, and ARC-LifeMed's and LifeTrust's representatives questioned why LifeMed was still trying to wind down the accounting five months after the LifeMed board voted to cease operations.
18. At the January 30, 2001, Meeting ARC-LifeMed and LifeTrust learned the following information:
A. AMC-TN never reserved against accounts receivable balances since inception of the business, while failing to timely, properly manage receivables.
B. AMC-TN never properly charged cost of goods sold to LifeMed since its inception. AMC-TN never performed physical inventories. It appears that inventory was stolen or misused by the parent pharmacy, not billed for or expired or was discarded. AMC-TN never alerted LifeTrust or ARC-LifeMed until January 30, 2001 that the inventory had been overvalued by $400,000. Incidentally, the manager of the parent pharmacy also told LifeTrust and ARC- LifeMed at that January 30 meeting that she experienced an inventory shrinkage of close to $500,000 separate and apart from the PIP (pharmacy in pharmacy) shrinkage. Evidently, AMC-TN staffed the parent pharmacy and the PIP with a grossly inadequate manager and failed to provide proper accounting and financial controls to the extreme detriment of the PIP and LifeMed.
C. AMC-TN regularly produced misleading financial statements for LifeTrust and ARC-LifeMed. For example, on January 30, 2001, Omnicare's regional controller provided to ARC income statements and balance sheets for each month of 2000 and for January 2001, which presents accounts receivable and inventory figures unadjusted and incorrect.
19. As a result of the above-reference misrepresentations and wrongful actions and omissions: (a) LifeTrust and ARC-LifeMed received materially inaccurate financial statements from AMC-TN; (b) LifeMed was unable to properly price the goods and services provided, resulting in cumulative losses; (c) the PIP was permitted to own its own inventory, which was detrimental to LifeTrust, ARC-Lifemed and LifeMed and ultimately hid the poor financial results of LifeMed; and (d) LifeTrust and ARC-LifeMed were unable to understand the cumulative poor financial condition which caused ARC-LifeMed and LifeTrust to continue their participation in the losing business longer than would otherwise have been the case.
23. AMC-TN and LifeTrust have asked for (a) a dissolution of LifeMed, (b) an accounting, and (c) and a return of their funds held in the Capital Account, but AMC-TN has failed to wind up the affairs of LifeMed, provide an adequate an (sic) accurate accounting and pay the amounts requested.
Plaintiffs then sought inter alia, the following:
A. Require AMC-TN to provide a thorough accounting of the assets and liabilities of LifeMed, including (1) a complete explanation of the current assets and liabilities of LifeMed, (2) a complete history of the receipt of funds and other property and the disposition of funds and other property, and (3) an explanation as to the status and whereabouts of the Capital Account and LifeTrust's and ARC- LifeMed's Initial Capital Contributions.
B. Order a dissolution, winding up and distribution of the assets of LifeMed in accordance with the LLC Agreement and applicable law
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