Free Appendix - District Court of Delaware - Delaware

Case 1:04-cv-01565-SLR

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t1eyer' - Direct

136

1 step down.
,) ¿

THE WITNESS: Thank you, Your Honor.
MR. BARKASY: Your Honor, for his next witness, the

3

4 Tx'ustee ¡'ll.l call Dc,borah Meyer.
5

THE COURT~ Just for planning purposes, how many

6 other witnesses does the Trustee have?
7
8

MR. BARKASY: We have three witnesses, Ms. Meyer, M .

Ponzi.o, who

9

Victor,

who

will be about ten minutes on direct, each, and will not be much longer tìwn that.
,1\nd

Mr.

10

THE COURT:
~iJR.. LEVY;

the Equity Committee?
You may

11

No

one.

.)

12
13
14

THE COUR'l:

All right, thank you.

step

forward and please

L'emain standi ng so you can be S'Norn

in.

COURT CLERK: PJace your hand on the Bible. Please

15 state your full name and spell your l.ast.

Hi
17

THE WITNESS; Deborah Marie Meyer, M-e-y-e-r.
DEBORAH MEYER, TRUSTt£' S WITNESS, SWORN

18

COURT CLERK: Please be seated.

19 UIRECT EXM1INATION
7.0 BY MR. BARKASY;

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¡1eyer - Di rect

13!

1 sales?

2 A To provide strategic leadership to the sales force and to
3 have strategic planning to grow top line.

4 Q Where's your office?
5 A Denver, Colorado.

6 Q Even though your office is in Denver, do you travel at all
7 as part of your job?

8 A ßt least fifty percent of the time I travel.
9 Q And what is iL you do when you travel?

10 A Severnl things. I :3ee customers, I will meet. with
11 individual branches and do sales office meetings. I will do

)

12 strategic planning with individua 1 regions.

n Q
11 A
'15 Q

To whom do you report on a day-t.o-day basis?

Dan Cr.owley.
How long have you been with Coram?

16 ß

Well, actu~Üly in 1988 I started with a company called

i 7 Caravan Medical Systems and started as a infusion nurse. I

18 went out in the field seeing patients, and then five years

19 later Caravan Medical Systems was part of the consolidation
20 that was created in the forming of Coram Healthcarc.

21 Q When did you become senior vice president of field sales 22 A August 1st, 2000.

.

23 Q What position did you have before that?

24 A Area vice presidenl~ of sales.
25 Q
Was it Mr. Crowley that promoted you?

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138

1 A

''.es t

2 Q And is ttië:it the position that you had when r'Jr. Croi,iley
3 became CEO in November of 1999?

1 A Area vice president?
5 Q Yes.

6 A Yes.
7 Q How did the company change af tc,( Mr. Crowley became CEO?

8 A Well, when Mr. Crowley became CEO Lhere was a fairly quick
9 change, 1 would say, in vision or clear vision f.or the company.

10 Pretty immediately we had a meeting, and it \"(35 very çlea
11 at that point that Dan felt that there was a clear, concise wa

)

12 to be able to creato a healthier Coram, and it still stands
13 today. It's grow

the top line, cut costs, wear j.t out, do

11 without and collect the cash. And that's really tho focus tha
15 we have from a financial standpoint for the company at the
16 beginning, and that still holds true for Loday as well.

17 Q

How have sales been under Mr. Crowley's tenure as CEO?

18 A

Well, preliminary for February we'va just completed the

19 eighteenth month or lop-line growth, month over month. So, we
20 have had solid growth for the last eighteen months.

21 Q

MS. Meyer, what is it liko to work with Dan Crowley on a

.

22 day-to-day basis? 23 A Intense. He' 5 -- he expects a lot from you. Working wi t
24 him and for him, he expects a lot of himself, but in working

25 for Dan Crowley you have to be very committed. You Ìl¿ive to

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Neyer - Direct
1 2

13F
í

i

understand what you do, and you have to do it well.

Q How closely does Mr _ Crowley work wi th you to trDck saleJ?
ca 11 him in the morning once I get the sales, and we

3 A I talk to him pretty much on a daily basis. The routine

4is

5 basically -- we talk about the daily sales, but we basically
6 start with the norLhcast and work our way over to California.

7 so, we go region by region as far as how they're doing, where
B they ara to budget, any opportunities, anything that'

11 get in

9 the way of making their budget for the month.

10 Q

And you do that every day?

11 A

I would say mostly every day. Four out of five days at

.)

12 the last.
13 Q
Have you given any thought to what might happen if Dan

14 Crowley's employment was terminated?

15 A

I have, because I think off and on thcoughout the

16 reorganization thc:rG's b8en rumors that have coul8 and gone, so
17 I have given it thought. And I would be

concerned, just

18 because I've been here for so long, and I think the stabíli ty
19 ilnd the trust thaL people have -- whcn I say the peopli-" I mean

20 the employees of Coram. The trust that they have and the
21 confidence they have in Dan's leadership and the confidence
?2 they have in Coram today is the strongest that I have seen it,

.

23 and I would be worried that that would change.

24 Q

Would Mr. Crowley' 5 departure have any impact on, your

25 thoughts about your own career plans?

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Meyer - Direct

i 40

i A

I guess I would go back to your last question.

1: would e

2 cüncerned of what Coram would look like. And I would be

,3 concerned about the opportunity t.hat would give our compe,t.i to '"

4 on the field. 5 Q You are aware that a Chapter 11 Trustee's been appointed
6 in this bankruptcy case?

7 A Ye.s .
8 Q And you know t.hat trustee 18 ,Judge Adams?
9 A
10 Q

'res.
Have you met Judge Adams?
Yes, I have.

I.

11 Pi
12 Q

And in what context?

13 A

Three different occasions. He has been in Denver at

14 senior management meetings, and I r ve had the opportunity to
15 a present.ation j n reference to field sales to Judge Adams.

16 Q

What happens at those manageí18nt, meetings, other than

1.'7 pre,sentati'On?
18 A
Judge Adams has gi van a book which encompasses the whole

19 presentation. Dan Crowley starts off the presentation with n
20 overvievJ of the company. I t,hink on the initial meeting he id
21 a history of the company, and then talked about the financia

22 situation we were in with each of the meetings. Then each 0

.

23 us with our individual departments r individual

24 responsibilities, wüuld go over the initiatives. A little b' t
~ 2 hI

different at every meeting, but we would go over the

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Meyer - CrossjTomashefsky

141 ,

1 initiatives that we were working on for our department.

2 I know the first time I had an overhead that had really
3 look at the daily sales ilnd compared it month over month to tl e

4 year previous to that.

5 Q Thank you. I don't have any further questions.

6 CROSS EXAMINATION
7 BY MR. TOt1ASHEFSKY:

8 Q Before Mr. -- you had worked for Coram, Ms. Meyer, when
9 Rick Smit was the CEO, correct?

10 A 11 Q

Correct.
Okay, and when you heard that -- and Mr. Smith left Cor

il

)

12 and was replaced by Mr. Cröwley; is that right?

13 A
14 Q

Correct.
And when you heard that one CEO had left and another was

15 going to be joining, at that Lime in 1999, you took a wait an

i 6 see at,ti tude; is thi1t right?
17 A
18 Q

'lhat s correct.
Okay, and if Mr. Crowley were to leave Coram today there / s

19 no reason why you wouldn' t al~o lake a wait and see attitude

20 depending on who comes in to replace him; isn't that right?

21 A

I think the situation' s a little bit different in that I

22 would also look at -- I would look at Lhe situation as it is.

.

23 I'm still very confident in what I do in the industry and for
24

the company. Tne difference would bù the instability t,hat th t

2") might create for the company, and thòt would, I think, would e ,

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Meyer - Cross/Tomashefsky 1 ~2
i a diffei'ent challenge than what \./C had when \.e had a t:ransi tidn
I ¡

2

from Rick Smith to Dan Crowley, because we didn't have the -- I

3 know it sounds strang~ -- stability in the middle of a
4 reorganization, but r' m out in the field a lot, so I see -- I
5 see the kinds of morale that'.'3 going on in the company.

6 It's a different level of enthusj,dsm, el different level r f
7 morale today than that transition that happened with Rick to
8 Mr. Crowley.

9 Q But what the effect on the morale would be would depend,
10 La some extent, wouldn't it, on who thereplacernent for Mr.

.

11 Cr01,¡ley is, wouldn' tit?

12

A Yes, except that I would also say on that, that whöLever
the moment is, I think that the competitors would probably

13

14 enjoy that moment, whether they sai.; it a moment of weaknesS a A

15 whatever, and I think that wüuld be a challenge for us to try
16 to -- try to keep the momentum going during that timeframe,

17 whatevor it may be.

18 Q

But you have no reason to believe that that' 3 a cha 1 leng ~

19 t.hat it would be impos:Üble t.o overcome, do you?

20 A

I would certainly try to overcome it, but I will tell yo

21 that they -- the competitors have certainly enjoyed whatever
22 they can do to try to disrupt what we've created over the las-

. L

23 couple years, and I believe that they wüuld enjoy that moment
24 of transition as well.

25 Q

All right, your area of responsibility, Ms. Meyers,

is

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143

1 principally sales; is that right?

2 A Correct.
3 Q Now, it' s true to say that you have never had any conver a
4 any disçussions with any customers of Coram about what the' r
5 reaction might be if Mr. Crowley were no longer with the

6 company; is that rlght?

7 A
8 Q

That's correct.
Okay, and you've also never had any conversations

with .1

9 suppliers of Coram about what their reactj On mi ght be if Mr.

10 Crowley were to leave the company; ) s that r.,ght? 11 A That's correct.

~

12 Q

Okay. And it is true, Ms. Meyer, that Mr. Crowley is

13 principally responsible for setting your salary?

14 A

Yes, although I don't know -- I think today

it's

more thj

15 responsibility of Mc. Crowley as well as Judge Adams.

16 Q

All right, but on January 1st, 2000 shortly after Mr.

17 Crowley took over as CEO, you received a raise of $30, 000 a

18 year from him, dght?
19 A

Corr.ect.
Okay. And you've roceivGd additional responsibility in

20 Q

21 the company from Mr. Crowley when you were promoted in August

22 of 2000, right?

.

23 A
24 Q

Correct.
That was before a Trus tee was appointed.

25 A Yes.

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Meyer - Redirect i 1
1 Q

lInd by the ì"ay, v¡fien you weX-8 -- before you were promote

2 to senior vice president your area was Midwost sales; is that

3 right?
4 A
5 Q
Midwest -- the actual terminology was the tund~a region.

'Cause .l.t was Midwest and north.
I had North Da kota . No -- I gues sit means open big spa e

6 A

7 Or something like that.

8 Q

Urn-hum. And would it be fair to say that at that time,

9 until you became seni or vice president, you didn't have an

10 overall view of what Coram' 3 financial picture ~a s; i 6 that
11 i;.ight?

.)

12 A That is correct.
13 Q
14

Your only perception at that time was that your aréd was

very successful, correct?
'P.

15

Correct.
Thank you.
No

16
17

Q

further questions.
Redirect?
RP.lHRECT EXAMINATION

THE COURT:

18

19

BY l1R.

BARKASY:

20 Q
21
?2

If Mr. Crowley's employment ended -- with Coram ended

today, Is i L your view that you waul d have a significant

problem in holding together the managers and sales staff that
report to you?

.

23

24

A Yes, I do believe I would, because even today I

25 continually deal with employees calling me direct, whether it

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Meyer - Redirect 1~5
II

i be an area nee president, regional vice president or even 30+
2 sales people will call me and just openly say, you know, "Are I

3 things going to be okay? 1 just heard somebody through this j'
~ recruiter that this is going on in the company, and you know, I
5 have an opportunity to go here or wherever, N so I can give th m
i

6 the reassurance that things are okay today.
7

I can't give. thet

the reaS5nrance Lhat Dan will be here, 'cause that'.' not in In'

8 control, but I have had many calls throughout the course of t e
9 reorganization, and some I've lost.

10 i mean, some people have chosen Lo go to a. competitor,
11 because they don't like the unknown or whatever it may he. B t

~

12 for the most part I've been able to build a very strong team
13 through the course of these last couple of years, and I don't
14 think I should ta ke all the credit, because I think as well a

15 myself, Dan has spent the time to educate, not only roysel f,
16 area, regional and in many case the orienLation groups that
17

come through Denver on really kind of a business 101, 201.
Q

18 19

Thank you.

I don't have anything furthe r . I have a question.
Yes.
Do

THE COURT:

20

THE WITNESS: THE COURT:
THE WITNESS:

21
22

you know i-iliy a
Do 1 Know \-ihy a

Trustee was apPo~nti:~f
Trustee
was appointed

.

23

I believe a Trustee was appointed because there was the fecli 9 ,

24 that there was a conflict with Dan Crowley, and service. And
25 so there was a -- for thaL reason chosen to have a Trustee

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Ponzio - Direct

i 6

1 appointed to help with the running of the company.
2

THE COURT; All right. Thank you.

3

t.m. BARKASY: Go up there and get sworn i 11. \'ia it to

'1 sit dOlJr.

5
6

THE COURT: Please remain standing.
COURT CLERK: Place your left and on the Bible.

7 State your full name and spell your last name for the Court.
8

TIlE WITNESS: Vito Ponzio, Jr, P, as in PcJu1, o-n-z

9 as in zebra, i-o.
10
VITO PONZIO, TRUSTEE'S WITNESS, SWORN

11

COURT CLERK~ Please be seated.
DIRECT ~XAMINATION
8Y MR. BARKASY:

-

12
1'0 .)

14 Q
15 11,

Mr. Ponzio, you work for Coram; is that right?
Yes, sir, that's correct.

16 Q

And what do you do for Coram?
I'm the senior vice president of Human Resources.

17 Pi
18 Q

And what are your duties?
Hy duties èncornpass 211 of the human reSOurce function,

19 A

20 benefits, training, compensation, employee organizational
21 development.

22

Q

Where's your office?
In Denver, Colorado.

.

23 A
24
Q
Ii.

To whom dQ you report on a day-to-day basis?
I report to Mr. Alan Maravito, the executive vice

25

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Ponzio - Direct
1 pres ident of the company.

1 7

2 Q How long have you been wiLh Coram?

3 A I've been with Coram since 1990, a little over twelve
4 years.

5 Q How long have you worked -- and some of that time was fo6 a predecessor of Coram?

7 A

That's correct.

I' 'Ie been with Coram since its inceptio

8 in 199il.

9 Q

!low long have you worked in human resources jn general?

J0A
11 Q

Since 1976, 27 years.
Were you senior vice president of human resources at the

"

12 13
14

time Dan cro\-ley became CEO in November of 1999?

A I was in that role at that timer yes.
Q

And to whom did you report before Dan Crowley became CEO r

15 A
16
17

I reported to Don Emeral, the f01~meL chairman, and Rick,
I

Smi th,
Q

the president and C80.
I i i

Has Mr. Crowley made changes in the way the company is

18 operaLed, as CEO?

19 A

Yes. Yes, when Mr. Crowley first came in the OrgaIlizatirn

20 we ¡vere more of a v-IL'tual company in that many of our. officers

21 were scattered Lhroughout the country rather than being based I
22 in Denver. Mr. Crowley began an initiative to bring the

.

23 corpora tc off ice to Denver.

Some of the individuals chose no

24 to come to Denver, so there was some movement in some of our

25 8enioL' positions.

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Ponzio - Direct
1

i!8
I

He also began holding us much more accountable to our

2

roles in much more of a ccminunicati ve style in terms Ol \..hat

¡J¡e

3 knew about the business, about sales, about operations, about
4 cash, and began communicatinÇj on a regular basis with the

5 employees.

6 Q Is ana of your responsibilities as senior vice presj,dent
7 of human resources to monitor employee morale?

8 1,, That's correct.

9 Q Have the changes that Jvr. Crowley has brought to the
10 company had any impact, on employee morale?

.

11 A

The~e's been many changes, yes. The company -- the

12 employeos felt during the Lime prior to Mr. Crowley of a sens 13 of uncertainty, a sense of job security. Mr. Crowley, with hi
14 communication styles, \.Jth his employee letters bogan a

15 campaign to keep the employees informed. And as the company
16 sta tad to improve and Ci:: that word got out l.herc in tenns of

17 our sales performance, in terms of our operational performanc "

is employee morale started to improve and our retention, our
19 turnover started to decrease, because there was more of a seD e
20 that we would be a viable ongoing company.
21, 0

As part of your duties, do you monitor employee turnover
Yes, we do.

22 A

.

23 Q

What has happened to employe,," turnover under Mr. Crowley
Our employee turnover has decreased under Mr. C~owley, a id

24 lI

25 that's fairly significant because of the shortage of

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Ponzio - Direct

1 9
I

1. clinicians.

It' 5 vital that we retain our employees

2 consistently. And our turnover rate has decreased over the
:3 last three yeai;s.

4 Q Has Mr. Crowley done anything to change the corporate
5 culture at Coram?

6 A The corporate culture is one of -- yes, he has. I'm
7 sorry, to answer the question.

8 Q And how has he changed the corporate culture?
9 A In terms of communication, j n termS of from a senior
10 level, a much more accountable, much more demanding roJ e for

.

11 those of us in senior positions. A cu1 ture of menloring. He s
12 very good ut bringing hi 5 direct reports to higher levels and
13 just in general, again, the communication style to keep t,he
Iil employees informed.

15 Q

i¡lhat are your viei-is as to whi:t might happen at the campa -iy

16 if Mr. Crowley's employment was terminated?

17 Pi

Our company's been through a lot in the seven years that

18 it' 5 been an organization and some of the predecessor

19 companies. Our employees believe that we have a very stable
20 company today.
I think if there was a change thal the general

21 consensus would be, UWhat does that mean again?"

22 It would be harmful to the company. It wouJ d be

.

23 disruptive to the company, because there is a sense that Mr.

24 amongst the employees that Mr. Crowley has done a very good job
25 for t_he company.

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Ponzio - Di, rect

r~o

i

This would just be another disruption that i don't

beli+
i

2 the company would be able to wIthstand.

3 Q Are Coram employees the subject of regular recruitinq
4 ef forts by competitors and -- or headhunters?

5 A At all levels, yes, they are. I think as I ment:ioned
6 earlier, there is a shortage of nurses and pharmacists and

1 there is a shortage of infusion experts, because it's a small 8 industry. The people at, Coram and the employees at Coram are
9 known to be the experts, and so the competitors try

to lure 0 r

10 employees all the time.

.

11 Q

In your view, would those recruiting efforts increa se if

12 Mr. Cro"J.ley's employment vias Lcrininated?
13 A 14 Q 15 A

Absolutely.
Why do you think that?
I think, again, the compet_itoL'sl t.he rocruit.ers, would

16 sei ze the opportunity to try and disrupt the company, to try

1/ and disrupt sales, and would just as they have been in the 18 past, would tout the fact that you don/t know Lhe future at
i 9 Coram. You do know the future of X company.

20 Q 21 A
7. Q

Would you stay at Coram if Mr. Crowley left?
I would have to consider my options.
I take it from yoiir testimony so far you think it ,,¡ould cie

.

23 a good idea for Mr. Crowley to stay at Coram.

24 A

I think it would be a very good idea for Mr. Crowley to

25 stay at Coram.

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Ponzio - Direct

i
') '-'

Q

Are you aware of the reasons why the first two plans

oil

Ji

reorganization submiLted by the debtors in this case wers not:

3

confirmed?
Yes, I am.

4 A

.5 Q And \-ihat. is your understanding as to the reason 7 6 A My understanding that there was a conflict thaL Mr.
7 Crowley may have had with one of oiir lenders and somethinç¡ thõtt

8 was not disclosed.

9 Q Does that change your view as to whether it would be a
10 very good idea for Mr. Crowley to remain at Coram?

.

11 A
12 no.

The way Mr. Crowley has run the company has not faltered,

13 Q

You mentioned that you worked and reported to both Don

14 Emeral and Rick Smith. How does Mr. Crowley's leadership of
15 Coram compare to that of Rick Smith and Don Emeral?

16 A

They really don't compare. Mr. 8meralal was on a

17 different mission. His mission was to try and sell the

18 company. Rick Smi Lh was young and inexperienced 1 n his role.

19 Mr. Crowley is a very tenured manager, very experienced
20 manager who has communicated with us, cornunicatod with t,he

21 employees, is very demanding in what he expects us t.o do in our 2? roles.
23 Q
In your view, is there anybody currentl y in senior

I)

l:, .

r,ii

management that could seamlessly replace Mr. Crowley?
I do not believe so, no.

25 A

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Pon z io - Oi rect

l-i2

1 Q

Havo yO'- met the Chapter 11. trustee, ~Tudge Adams?

2 A Yes, sir, I havo.
3 Q What occasioned you to meet wiLh Judge Adams?

4 A I've met with Judge Adams on his several visits to the
5 Denver corporate office when we were updating the judge and

6 qi ving him an overview of the company's opera t.ions, either fr .im
7 his first visit or from his subsequent visits, how we've done

8 since those visits. 9 Q Did you have any private discussions with the Trustee
10 about how Coram was doing while the judge was in Denver?

.

11 A

Yes, I cLid.

I had the opportunity, actually, to pick up

J,) Judge Adams and transport him to the corporate office. And i 13 was during that ride that we said -- he asked how the company 1~ was doing, and I personally said the company is really doing

15 I-rell.
16
17

MR. BARKASY;

I don't have any further questions.

MR. TOMASHEFSKY; Your Honor?
THE COURT: You may. Speak into the microphone,

18

19 though, if you wish to be heard.

20

MR. BEATIE: Your llonor, I think we':re nearing the

21 end, but would it be appropriate now Lb take a brief recess? I
22 have some matters on behalf of Mr. Feinberg that I need to

.

7.3 consider.
21

THE COURT: All right.

25

MR. BEATIE::

If that' B convenient for the Court.

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2

Ponzio - Cross /Tomashefsky 153
THE COURT: All riqht, et's take a ten minute reeee/s.

All right. He's not under cross, so you may speak Ii

3 with your counsel if YOll need to.

4 (Recess)
:i

¡'1R. TOMASHEE'SKY; May I proceed?

6

THE COURT: You ma y.

7 CROSS BXAMINATION
8 BY MR. TOMASHEFSKY:

9 Q Mr. Ponzio, in your capacity as human resources senior
10 vice president at Coram you have discussed with Mr. Crowley a

.

11 least at some level the negotiations he'd been having with thp

12 Trustee to extend his contract,
13 A 14 Q
Yes, sir, that's correct.

haven't you?

And you're aware that his contract extension is only for

15 ë1nother four months 110\/, 'ti.l the end of June, right?

16 A
17 Q lB A
19 Q

That's correct.
Tha t' s

That's what I understand.

-- the only commitment Mr. Crowley has made to Coram thus

20 far.
21 A
That's my understanding.

22 Q

And others in senior management know that Mr. Crowley's
only another four months.

.

23 conunitinent to Coram at this point is

24 A 25 Q

Tha t' s correct.

In fact, it's public information, because it's been filej

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Ponzio - CroSS/Tomashersky 154
1 with the Courl: that Mr. CrOlvley'S cornmi tment to Coram is onl

2 another four months.

3 A That's correct.
4 Q And that hasn't had a tremendous de-stabilizing effect 0
S Coram as you sit here today, correct?

6 /\ That's Correct.
7 Q Now, you mentioned, Mr. Ponzio, that employee morale has
8 improved considerably at Coram since Mr. Crowley took over; i

9 thi1t right?
,10 A

Yes, sic
Now, Coram did an employee satisfaction survey some time

11 Q

~

12
13

ago tha t you helped aclmini ster i di dn' t you?

A That's also Correct.
Q

l4

And that was about three years ago?
I i

15 A 16 Q
17

December of 2000.

! I

And that WilS j ntended to establish a kind of a bilsellne if

employee morale for Mr. CrOl.¡iey?

18 A 19 Q

That's right.
Okay, and in general, back in December of 2000, employee

20 morale as shown by the Survey results was quite high, wasn't

21 it?
22 A

Employee morale was not qui te high.

It was stable.

.

23 Q

Well, in general it was a very positive survey in terms

24 employee satj sfaction, Wi1sn't It?
25 A
That's right, it was one year after Mr. Crowley had been

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1 in his rOle.

1 :) .. ~ c

2 Q

That was at least

that's three yoars ago, though.

3 A December of 2000, ,')0 it would be a little over two years.
4 Q All right. And by the way, YOU'Ve never __ atid there's

5 never been a folJow-up to that employee satisfactj,oii survey.

6 A There has not.
., Q ¡"Ir. Crowley's never asked for one.

8 A Actually, yes the decisIon was made to do the second
9 employee survey \vhen we came out of bankruptcy, whj ch '-le had
10 assumed would be one year later. That didn't Occur, So we di
11 not proceed with the
with the next survey.

g.

12 Q

And you haven't

there's no current plans to do ona.

13 A
14 Q

No, there's been discuss ions, but there's not a schedule.

And by the way, you've never mentioned to JUdge Adams, th.

15 bankruptcy trustoe, that thore was dn employee satisfaction

16 Sur.vey in your discussion wit.h hjm.
17 A 18 Q
The subject. did not Come up, no, sir.

Now, from your perspective there was SOme conCern of

J 9 Jnstabili ty at Coram when tho Trustee was appointed based On

20 employeos questions that Came into you; is that rj ght?

21 A 22 Q

I'm sorry? Repoat the que~tion?
J:'rom your perspectivE: there was concern of instability at

.

23 Coram when the Trustee was appointed, based on employee
24 questions that came to you.

25 A

There was a concern as to what exactly the appointment

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Ponzio - Cross/Tomashefsky
i meant, yes.

I

56

2 Q But your unders tanding is that Mr. Crowley -- that Mr.
3 Crowley's role a t Coram did not change after the T.rustee was

1 appointed; j s that right?

5 A That is my understanding, yes, sir.
6 Q ,llnd you have an understanding that subsGquent to the
7 Trustee's appointment Mr. Crowley would continue to function n
8 the role that he was per forming before the Trustee was

9 appointed.

10 A

That's correct.
And you got that understanding directly from Mr. Crowley

11 Q

~

12 correct?
13 A
From my Crowley, actually, and from Judge Adams.
Now r I believe there was a meet.ing three or four months

14 Q

15 ago that was attended by Judge Adams and his lawyers and othe
16 mGmbers of senior management in which there was a general
i 7 convorsation on the t,opiç of the impact On Coram's work force

18 if Mr. CL'o'tlley ceased to be with the company; Ü: that, ri.ght.?
19 A
The timing I'm !lot SUre of, but yes, there was a
20 discuss,ion that occurred.

21 Q

And the subj ect of Coram's key employee retention plan a d

22 turnover came up at that discussion?

.

23 A
24 Q

That came up ut the last meeting, yos.
But you, yourself, didn' t say anything about the key

25 empJoyee retention play or employee turnover during tha L

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Ponzio - CrOSS/Tomashefsky

1 moeting; isn't: that right?

it.
_, i
i I

2 A Not at that discussion, no.
J Q And it' 5 true that at that -- Deborah Meyer was at that
4 meet:Lnç.r is that right.?

5 A Yes.
6 Q And it' s true that you can't remember anyth.ing specific
7 that Deborah Meyer said on the subj ect of the key employee

8 retention plan and turnover at Coram at that meeting with the
9 Trustee; is that right?
10 ."4
Her exact ~ords, no.

11 Q

And you can't remember anything specific that Nichael

~

12 Saracco said at that meeting at that subject when he was there;

1.3 j s that right?
14 A
1.5 Q
Exa ct words ( no.

You do remember JUdge Adams asking a question, "Has anyon

l6 left the organization"?'1

17 A

Yes, that's correct.

18 Q
iq A

And the answer to that was no.
That's correct, 'c;¿:use the employees ~ere still under

20 their agreement, their KERP agreement.

21 Q

The KER/? agreement, tha.t's the Key Employee Retention E'la

22 required the employees to stay with Coram for some period of

.
_l_

23 time as a condition of receiving payment; is that correct?

24 A

Right, we are still in that pe~iod.

25 Q

Okay, when is that poriOd over?

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~!:,8
I !

1 A

I believe it's March 6th.

2 Q So, as of March 6th the employees are no longer required
3 to stay with Coram.

ij A That's cor.rect.

5 Q And no one has talked about extending that as far as you
6 know?

7 A About extending the r,ERP?

8 Q Right.
9 A No one has talked to me about that. Well, I take that
10 back. No One has said there will be an extension. We'vG had

.

11 discussions, some of the senior managerf.:, about what to do
12 after March 6t.h.

13 Q

But no Qne has said there would be an extension of the k y

14 employee retention plan to ensure continued employment of the

15 senior management.

16 A
17 Q
18

There has not been another plan put in placer correct.

Thank you.
MR. TOMASHEFSRY: No further questj,ons.
MR. BARf,i\SY: Your Honor, 1 jUBt have one question.

19

20 REDIRECT EXAMINATION
21 BY t'1R. BARKASY;

2? Q

Mr. Ponzio, you Were asked a questj,on about whether it w s

.
1M

23 your understanding that Mr. Crowley's role was the same bcfür
24 and after a Trustee was appointed. You're awar.e -- well, wha
25

do you know about the -- what do you know about the level of

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Victor - Direct

1 expenses that must be reviewed by Judge Adams?

2 A There is an approval policy in place in terms of dollar
3 linii ts that start at an employee level a 11 the way up to Mr.

'159
I

4 Crowley, and Mr. Crowley has a $50,000 limit.

5 Q And previously Mr. Crowley didn't have to look to
6 to approve a $ 50,000 expenditure, before a Trustee was

.nYbodt

7 appointed.

8 A That's correct.
9

I

MR. BARK~SY: That's all I have.
THE COORT: All right, thank you.

10 11

HR. FaPNES: Your lIonor, in the j,ntere.st of speedin

~

12 things along, the Trustee has One further
13
14

witness,

and --

TH8 COURT: Okay.
MR. KIPNES: We will be brief. Mr. Victor.
COURT CLERK: Please place your hand on the Bible.

15

J 6 Please state your full name and spell your last name for tho

17 Court.
18

THE WITNESS: Jay Scott Victor, V-i-c-t-o-r.
JAY SCOTT VICTOR, TRUSTILE'S WITNESS, SWORN

19

~o

COURT CLERK: Please be seated.

21 DIRECT EXAMINATION
22 BY 11R. KIPNES:

.

23 Q

Mr. Victor, you've previously testified in these

24 proceedings; is that correct?

2S A

That is correct.

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160

1 Q You are among the financial advisors retained by the
2 Trustee?
3 li Th¿¡t is cOl:rect.

4 Q Have you discussed with the Trustee an the Trustee's
5 counsel your views on the impact on Coram vJere Ivlr. Crowley's
6 employment to be terminated?

7 A I have.
8 Q And what have you said'?
9 li The Trustee and the Trustee's counsel had a sked me if I
10 thought the company would suffer or may suffer if Mr. Crowley

-

11 was no longer employed ~Jith the company. Ny response was tha ,
12 yes, it is a possibility and that I worried about two distinc

13 things.
14 Q
Would you tell us what two distinct things you worried

15 about?

16 À

I worry that if Mr. Crovdey was no longer with the campa y

17 the referral sources which arB the lifeblood of this company

18 may see that as ä sign of weakness, that the CEO i~ no longer

19 there or the chief executive is no longer there. And those
20 referral sources are the physicians, the practice groups and

21 the hospitals.

22 lind my even larger conCern was that the key managers, th

.

23 people who are actually in the offices ùround the country tha
24 see the patients, generate the revenue where the day-to-day
25 business of this company goes on may leave because of

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Victor - Direct

1j61.

1 instability and go to competitors.

2 Q Mr. Victor, have you reviewed the financial performance f
3 Coram for the last year or ::;o?
4 A Y'3S.

5 Q Have you reached any conclusions based on that review?
6 A Yes.

7 Q nnd what conclusions have you reached?
8 A My conclusions are that the company i3 performj ng qu.i te
9 v¡ell. The company has approximately $28 million of EBITDA for
i 0 the prior last twelve months, has not borrowed anything

on it

.

11 debtor-in-possession facility and has approximately $20 milli n
12 of Celsh built up.

13 Q

Do you know, Mr. Victor, the process by which sale:3 are

11 reported to arri VB at sa 1 es figures within Coram?

15 A

¡\Jell, my understanding is t.here -- there are a number of

16 ways that input goes into the system, but. when a new patient is

17 brought into the company for horne infusion t.herapj es, dependi"lg
18 on what type of therapy, it's inputted into the system.

19 Whoever is the insurer, or if it's a government payer, Medicaid

20 or Medicare, is input into the system, and bills are generate

21

Q

And that starts at the branch level?
That starts at the branch level, yes.

22 A

.

23

Q

Based on your work in this case have you see any evidenc

24 whatsoever that Coram's financial figures have been manipulated
2:' by management in any way?

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Victor - CrosS/Tomashefsky

ir2
i

1 A

No . No WdY wha lsoever .

2 Q
') ..

Thank you, SiL'.
THE COURT: Cross?
CHOSS E:XAMINi:iT.( ON

I I

4

I

5 BY MR. TOMASHEFSKY;

6 Q Now, Mr. Victor, you were retainod as an advisor to the
7 trustee just this past October; is that right?

8 A That is correct.
9 Q Okay, and you were not retained for the purpose of
10 evaluating or advising on whether to reta in Mr. Crowley.

11 A No.

~

1.2 Q

In fact, the Trustee has never asked you to evaluate Mr.

13 Crowley's performance: isn't that right?
14
A
Q

Only the performance of the company.

15

But not ivJr. Crowley's performance.
Not as an individual.

16 l\
17
Q

And the Trustee or his representativGs have never asked

18

you to give them your opinion on whether Mr. Crowley' 5

19 cmployrnont aç¡roement with Coram should or shouldn't be

:70 Gxtendcd¡ isn't that d ght?

21 1:i

That' s coi:rect, only my concerns if ¡Vlr. Crmvley v¡ere no

22 longer employed.

23 Q

So, you never expressed an opinion to the Trustee on the

It

24 subject of whether Mr. Crov/ley's employment contract should Dr

25 shouldn't be extended.

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Victor - CroBs/Tomashefsky
i A 1-'10.

1 -3

2 Q Mr.
3 EC-17.

Victor, I am showing you a document that's been markld
It's a three-page document, the first page of which ir

4 a fax covor sheet. The second page of it is titled, "Obj ecti in

5 of SSG Capital Advisors, LP to the Official Conunittce of Equi y

6 Security Holders, February 13, 2003 Subpoena." You see lhat?

7 A Yes.

8 Q Have you ever seen thi s document before?
9 A Never.
10 Q

Okay. SSG is the firm you work for?
Yes, I'm a managing director.

.

11 TI
12 Q

And you are aware that the Equity Committee served a

13 document subpoena on SSG.

14 A
15 Q

Yes, I received it.
Okay. Now, focusing on the second page of Exhibit EC-17

16 you see under number one in the objections, it, says, "To the

11 extent the subpoena seeks testimony and/or documents relating

18 Lo SSG's valuation analysis of Coram Healthcare Corporation a d
19 Coram, Inc. the subject subjects SSG to annoyance,

20 embarrassment, depression and undue burden because (al SSG ha

21 not completed its valuation analysi s or issued a íirw,l re=port "

22 You see that?

.

23 li_
21 Q

Yes.
And that's true, isn't it, that SSG has not completed it.

25 valuation ana lysis or issued a fj nal report?

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¡ , IC4

i A

Yes and no.

As of Friday \tie ¡,¡erG asked by the company t

,1.0

2 expeditiousiy complete our Series B stock valuation which we
3 c1j_d and did furnish it to Mr. Danitz, the CFO of the company.
4 1 don't know if that' i3 final, but that \-Jas issued as of F'rida

5 Q All right, that's not bGeI1 furnished to the Equity
6 ConuitteG, has it?

7 A Not to my knowledge.

8 Q Has it been furnished to the Trustee's counsel? 9 A They were copied On it, yes.
lO Q

All right. Now, you see the third page of this document.

,

11 It's signed by layors at the law firm of Schnader, Harrison,

12 Segal and Lewis, LLP, and Weir & Partners, LLP as attorneys fo

13 SSG Capital Ad'v'i,90rs, LP?
14 A
15 Q
I see that. I hope I don't have to pay them a bi ll.
Well, because in fact they were never your attorneys r

16 isn't tha t right?
17 A
They are not our counsel.

18 Q

And they didn't represent you in connection wi th this
Well, we did speak about this subpoena, and I advised

19 SUbpoena; is that right?

20 A

21 counsel for the Trustee that) would happily prepare our own
22 objection or ~ign an objection once I reviewed what they had

.

23 prepared, but it didn' t turn out that way.

24 Q
/.5 A

You nover retained them to represent you.

Did not.

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1 Q

1':;.5

Okay, and you dido't retain them to represent you at YOu~ i

2 deposition last week, either, did you?

3 A Did not.
4 Q Okay. But it was the case, by the way, that at your
5 deposition you received several instructions not to answer
6 questions from the Trustoe's Counsel; isn't that right?

7 A That is correct.
8 Q All right, now your deposition was taken last Thursday,
9 Mr. Victor?

10 A Yes.
II Q
Al i right, and the day before that deposition you spoke to

~

12 the Trustee's counsel, and they asked you whether a crisis
13 manager could come into this situation.

14 A
1.5 Q

Yes.
Okay.
It wasn't just the day before. We've had those

16 A

11 discussions for some short time before the hearing.
:18
Q

Maybe even as many as fifty times.

19 A

I don't know about fifty, but we have discussed it before

20
21 22

yes.
Q

~ll right, ~nd the day before your deposition you told

them
A

.

23
24

cris.i.s manager could be brought in; is that r,i.ght? Could be brought in at any time.
a

that

Q

Okay, and you

told
a

them

that

a

?l ~:: cost about $80,000

senior crisis manager waul

month.

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Victor - Cross/Tomashefsky
!ì

166

F01: an individual, that's correct.

2 Q And when the Trustee asked you could a crisis manager ru
3 this business, your answer was yes.

4 A I believe a crisis manager slash turnaround advisor coul
5 run this company, yes.

6 Q Indeed, isn't it your view that a competent cri sis
7 COD ld be found to run the COmpany the way its being run

8 A In terms of financial performance, maintaining the
quo, yes, I do.
Q

10

A

crisis

manager could be found to run the
jn

co!npan y

the

w

.

11

it's
A
Q

y

being run today
I believe so.
All right.

all respects.
sure,
I

12 13

To be

take

it

you bGlieve

that

l-1r.

14 Crowley has brought some discipline to th is company, bul: you

15 believe that he can be replj cated, don't you?

16 A I believe that during tho remainder part of this year,
17 when the company is either going to be restructured, sale or
18 what have you, I believe a Crisis manager could run this

19 company.

20 Q But you believe Mr. Crowley could be replicated, don't
2 i you?
22 A
I don't know what you mean by replicated, but he could b

.

23 replaced by a turnaround manager for the balance of this year

24 25

I do believe that.

Q Well, in your deposition, Mr. Victor, Page 70, you were

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1

~67 i

asked the question, "Have you over expressed the po~nL of Vi~W
that Mr. Crowl ey has unique talents or competencies that wou~d

2

j be extremely difficult to replicate through another manager?'

4 And your answer was, "Only one that I can think of, the

5 discipline that he brought to this company. I think he can e
6 replicated."
7 You said that, didn't you?
8 J-i Yes.

9 Q Okay. And you're not really concerned about whether a
10 crisis manager could be incapable of continu tng the disclpli G

.

11 that Mr. Crowloy has brought to Coram, arc you?

12 A
1., .j
Q

NO.

But as you testified earlier, you do ha~e some concern

14 that it's necessary to avoid creating a fear that people will

15 think the company's going to be liquidated if a cLLsls manager
16 is brought, in.

17 A Yes.
18 Q
Okay. But you agree, don' t you, that it would be possible

19 to accomplish bringing in a crisis manager in a way that avoi s

20 that fear by assuring people that the company is not going to

21 be liquidated.
22 Pi
Yes and no. I think that a crisis manager being brought

.

23 in can overcomo fears or uncertainty Lhat referral sources IDa
21

have. I just don't know if a cri.i. ma..ger ca. -- coming i~
can get past th_ fear of Lh. key .~loyees in all the .at_111 e

25

B382