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Struggling Eaglecard Inc. Decides To Liquidate Credit Card Company Abandons Attempts To Resume Business

By Bert Caldwell bertc@spokesman.com(509) 459-5450

Eaglecard Inc. has been grounded permanently.

Despite an agreement with the Internal Revenue Service that provided for the return of company assets, attorney Barry Davidson said Eaglecard President C.E. “Ed” Franklin decided to liquidate the company rather than reorganize as proposed in a U.S. Bankruptcy Court petition filed April 15 in Spokane.

Eaglecard issued credit cards good for merchandise from company catalogs, or use at a limited number of merchants around the country.

The IRS action put 50 Eaglecard employees out of work. The workers were owed about $6,000, Davidson said.

It also is uncertain what will happen to payments made by would-be subscribers who never received a card.

“Our primary interest is to see the employees are paid,” he said.

But payroll and subscriber fees are in limbo because of IRS claims against another company, Cube Enterprises Inc., in which Franklin has an interest. Cube filed bankruptcy in Las Vegas April 4, precipitating the IRS raid in Spokane, where Cube and Eaglecard share an address.

The IRS claims Eaglecard, which acquired some Cube assets, is also responsible for its tax liabilities. Eaglecard challenged the IRS position in a lawsuit filed in Bankruptcy Court April 18.

Cube owed the IRS almost $140,000, a sum Franklin reduced with a $50,000 check last Tuesday.

The agreement reached with the IRS the following day provided for another $5,000, plus the submission of Eaglecard’s operating statements for the next three months.

Davidson said then that the deal could clear the way for Eaglecard to resume business. Thursday, he and Franklin put that idea to rest.

“We just had too many obstacles,” Franklin said, particularly with what he called an unyielding IRS.

Davidson said Eaglecard would continue with its lawsuit against the tax agency.

Also, Eaglecard was sued in March by the state of Washington, which alleged violations of consumer protection and unfair business practice laws.

, DataTimes