On top of the debt held by T-Mobile, Belmont Trading owes money to a shareholder, the U.S. Small Business Administration and several OEMs, according to a court filing from the company. | Nuangthong/Shutterstock
On Friday, T-Mobile asked a judge to order Belmont Trading to pay the $6.08 million that the wireless giant says it’s owed. On Tuesday, Belmont Trading filed for bankruptcy protection.
Belmont Trading, a global ITAD and used electronics reseller based in Northbrook, Ill., filed for Chapter 11 bankruptcy protection on Sept. 12, claiming assets of $2.58 million and liabilities of $15.77 million.
The voluntary filing, which is in U.S Bankruptcy Court for the Northern District of Illinois, came just days after T-Mobile sought summary judgment in a separate case. T-Mobile first sued Belmont Trading in October 2022, claiming Belmont Trading, which was its phone resale and recycling vendor before the contract was canceled last year, shortchanged T-Mobile to the tune of $6.60 million.
In its lawsuit in U.S. District Court for the Western District of Washington, T-Mobile claims its years-old agreement with Belmont Trading required the processor to resell or recycle T-Mobile’s outdated, damaged or otherwise unwanted phones. Through the deal, which was amended several times, Belmont Trading would receive service fees or a portion of the sales revenue, and the vendor would remit the remainder of the sales revenue to T-Mobile. The wireless services giant claims Belmont Trading failed to pay it $6.60 million of the sales revenue it owed.
On Aug. 14, T-Mobile filed a request for summary judgment in its favor in the contract dispute. On Sept. 8, T-Mobile submitted a filing noting that Belmont Trading had failed to reply to the motion by the deadline, and T-Mobile asked the judge to immediately rule in its favor and award it $6.08 million (T-Mobile alleges that it can claim damages of at least $6.59 million, but the $6.08 million it’s asking for represents “the undisputed portion of T-Mobile’s total damages”).
Assets and debts detailed
In its filing, which was signed by company founder and President Igor Boguslavsky, Belmont Trading noted that it owes money to a host of organizations both inside and outside of the electronics recycling and reuse industry.
The largest is the $6.60 million listed as owed to T-Mobile USA. (The filing did not mark T-Mobile’s claim as disputed, despite Belmont Trading in December filing a legal response refuting T-Mobile claims and asking the court to dismiss the lawsuit.) After that, Belmont Trading’s largest unsecured claim is actually $1 million owed to a company shareholder, New York resident Shmouel Yaari, who loaned the company money in spring 2020, the filing indicates.
The filing also notes that the company owes the U.S. Small Business Administration $350,000.
In terms of OEMs, retailers and e-scrap industry players the company has done business with, Belmont Trading claims it owes varying amounts to Ericsson, EWASTE+, GameStop, Microsoft, Schupan Asset Management and Sipi Metals Corp.
The largest single asset category Belmont Trading reported comes from potential liquidation of the company’s ownership interests in two other companies. Those include BT Recycling Solutions, a wholly owned subsidiary in Mexico that has an 80,000-square-foot facility and employs over 100 people, and Belmont Renew Corporation, a holding company that Belmont Trading owns 48% of.
Founded by Boguslavsky in 1988, Belmont Trading does business from locations around the world, including its leased 78,500-square-foot headquarters facility in Northbrook, Ill. The bankruptcy filing notes that the company’s tax returns are complex because of its multinational subsidiaries and foreign taxes.
The Chapter 11 filing asks about other assets, including tax refunds due to the company and loans the company provided to shareholders. Regarding taxes, Belmont Trading’s filing noted that it reported an operating loss on the 2022 tax return. It also said it has loans to shareholders. But the amounts aren’t known because the company’s “CPA has not released the 2022 tax return due to a balance owed.”
Chapter 11 filings allow companies to reorganize their debt and continue operating as viable businesses, although filing for that chapter provides no guarantee that a judge won’t ultimately order the liquidation of the company’s assets.
Boguslavsky could not be reached by E-Scrap News for comment on Wednesday.
E-Scrap News was alerted to the bankruptcy filing by Pioneer Funding Group, which purchases bankruptcy debt. Adam Stein-Sapir, a portfolio manager at Pioneer Funding Group, noted that Belmont Trading filed for Chapter 11 protection, not Chapter 7, which involves a straight liquidation process.
While noting that Belmont Trading failed to respond to T-Mobile’s motion for summary judgment, “even assuming the judgment gets entered against them, they can use bankruptcy to come up with a plan to pay creditors (over time) and reorganize,” he said.