Credit card exec files for bankruptcy after $300M verdict Greg Daily is CEO of iPayment Inc.

By Getahn Ward • THE TENNESSEAN • May 12, 2009

 

Credit-card processing entrepreneur Greg Daily filed Monday for personal bankruptcy protection after a California venture capitalist won a $300 million jury verdict against him.

 

The award followed trial of a 6½-year-old complaint in which Douglas Shooker accused Daily of thwarting his attempts to invest in Nashville-based iPayment Inc. through an earlier agreement. In his filing in Los Angeles Superior Court that sought more than $115 million in damages, Shooker also accused Daily of stealing his research into a Web-based credit card processing system.

 

iPayment is the second successful credit-card processing venture for Daily, who paired up with Richardson Roberts to launch the erstwhile Nashville-based PMT Services Inc. in 1984 while in their ’20s. Each man netted millions from selling PMT in September 1998.

 

Upon launching iPayment, CEO Daily said that the company targeted processing of Internet-based transactions because it offered higher margins although it also involved more risk.

 

Daily’s assets are estimated at $10 million to $50 million and liabilities at $100 million to $500 million in the bankruptcy filing. He has 15 days from Monday to give the court a list of everything he owns and everyone he owes, though his lawyer could request more time.

 

By filing under Chapter 11, Daily avoids surrendering his assets to a bankruptcy trustee and instead would be required to file monthly updates on his income and expenses to the U.S. trustee’s office. "It’s likely a strategy to maintain the status quo while they appeal that big California judgment," said John McLemore, a local bankruptcy trustee, adding that Daily would be allowed to keep his assets and submit a plan to repay a portion of his debt.

 

James N. Penrod, Daily’s San Francisco-based lawyer, said he disagreed with the verdict and would likely appeal.

 

In a regulatory filing, iPayment said the suit was brought against Daily individually. "Neither the company nor any other shareholders, officers, employees or directors were a party," it said. "The company has no indemnification, reimbursement or any other contractual obligation to Mr. Daily in connection with this legal matter."

 

Last year, iPayment saw its net income rise nearly 165 percent to $14.3 million from $5.4 million. Revenues, meanwhile, increased 4.7 percent to $794.8 million from $759 million.