Sale of five San Antonio-space dental clinics’ belongings potential customers to fraud lawsuit in opposition to Dallas buyer

The house owners of five dental clinics in San Antonio and Schertz offered the business belongings to a Dallas business in 2016 for $3.5 million.

But getting customer KP-SA Management and principal Thang “Kido” V. Pham to spend has been like pulling tooth, say the sellers — corporations owned by dentists Scott and Diana Malone of San Antonio.

The Malone companies this week sued KP-SA Management and Pham for fraud, conversion — the unauthorized taking of assets — and breach of agreement in point out District Courtroom in San Antonio.

The clinics run beneath the name Smiley Dental & Orthodontics.

Beneath terms of the deal, KP-SA paid out $300,000 up entrance and financed the remaining $3.2 million with the Malones. The invest in value was comprised of virtually $3.2 million in goodwill, $160,000 in accounts receivable, $100,000 in inventory and $80,000 in fixtures and machines.

KP-SA should have compensated virtually $3 million by now but has only paid out $781,140, the lawsuit alleges. The plaintiffs are trying to get more than $3.8 million in damages and curiosity.

The parties’ settlement grants the Malone corporations an instant suitable to foreclose and consider possession of the collateral upon a default with no going to court, the go well with suggests.

In response to desire letters and foreclosure notices, however, Pham “threatened to abscond and mystery away all collateral” so the plaintiffs would hardly ever locate it, the fit provides.

“Mr. Pham has constantly created these threats and lately has reiterated that he has no challenge with emptying all accounts and hiding all the collateral and devices of the dental procedures,” Scott Malone suggests in a declaration hooked up to the lawsuit.

To prevent that from taking place, the Malone businesses obtained a non permanent restraining get that stops the defendants from distributing any revenue or removing furnishings and devices from the techniques.

It could not be identified if Pham or his associates opposed the request for the order. He could not be achieved for remark Thursday. Austin lawyer John P. Ferguson, who represents the Malone organizations, reported he could not remark with out his clients’ permission.

A hearing to extend the purchase right until a trial is established for Jan. 24

The clinics, 4 in San Antonio and a person in Schertz, had operated possibly as M&M Orthodontics or U Too Dental & Orthodontics prior to the asset sale to KP-SA.

A Malone partnership continued to own the clinics’ serious estate, so it has been KP-SA’s landlord.

The clinics had been rebranded as Smiley Dental & Orthodontics soon after the asset sale closed. One more Dallas firm, Smiley Dental Administration Co., has managed the methods and gets 15 percent of the gains, whilst KP-SA receives 85 % of the profits, the suit says. Smiley Dental has 31 places in Texas, its web page claims.

Smiley Dental Administration is owned by Pham’s ex-wife, dentist Lynh Thy Pham, the fit states. It also is a defendant in the match, accused of getting possession of the Malone companies’ collateral and applying the collateral while they stay unpaid. She didn’t promptly respond to a request for remark.

In his declaration, Scott Malone claimed Thang Pham has threatened bankruptcy when pressed to make payments on the mortgage. KP-SA in fact filed for Chapter 11 in November 2017. The petition outlined the Malone partnership as the biggest unsecured creditor, owed $3.2 million.

Two months soon after submitting, KP-SA voluntarily dismissed its bankruptcy scenario. It didn’t want to go on the situation due to the fact it explained all troubles with the landlord experienced been settled. In his declaration, Scott Malone claimed the individual bankruptcy was dismissed soon after he manufactured a deal with KP-SA to postpone payments.

Meanwhile, KP-SA held an “exclusive initial option” to purchase the clinics’ office environment buildings, in accordance to files filed with the lawsuit.

At some point, Smiley Dental wished to acquire the five business structures and another that was not part of the 2016 offer, Malone states in his declaration. Immediately after Smiley Dental was not able to line up the cash for the obtain, Malone moved to provide the true estate to one more trader.

“When Kido found out I was marketing the genuine estate to another person else, he threatened to consider me to courtroom and tie every thing up, as very well as move all of the collateral and individuals to Smiley’s workplace on Fredericksburg Highway … where I could not get it,” Malone says.

The Malone partnership previous thirty day period bought its Schertz office environment making, the Guadalupe County Appraisal District’s website shows.

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