Will 2001 mean growth for tech or a slowdown?

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By Judith Potwora

Dec 11, 2000 Updated Dec 11, 2000, 12:00am EST

Sparks are flying as the speeding train of the New Economy taps its brakes, but many observers see the slowdown -- from breakneck to fast -- as a sign of a maturing industry.

"I think we may have plateaued," said Kenneth F. Antley, corporate attorney and partner at Sutherland Asbill & Brennan. "Part of it, I think, is psychological. How long does it take for the shock to wear off, for people to say: `I'm ready to come back into the market?' "

Antley helps companies through the steps of growth: incorporation, funding, stock option plans, employment agreements, and mergers and acquisitions. He acknowledges that one of those steps -- funding -- will take more persistence and patience to negotiate.

Slower growth

"Obviously it's going to be harder for the next six months to a year," he said. "It may never be the way it was a year ago. What I suspect is going to happen now is that it will be more like it was five or six years ago, where a start-up has to spend a lot of time looking for money, and they'll grow more slowly. I think it shows that the Internet is ... more like a mature industry. It's not the complete gold rush that it was."

Some say that the gold rush led to a lot of "vapor-ware," products that provided quick fixes but didn't offer long-term solutions for companies. 

And that has led the industry to what some describe as a sort of technology backlash.

"From a technologist's standpoint, a lot of the stuff was built in a kind of speedy way -- gluing things together," said Aleksander Szlam, chairman of eShare Communications Inc. "These products only have a certain life cycle and can only address a certain short-term market."

Szlam founded the company, which designs call-management software, shortly after graduating from Georgia Tech. He endorses methodical software design and products that are built to be secure, scalable, and compatible with other systems.

"Next year, from a technology standpoint, I think there will be a lot of rebuilding and creating a lot of products that will meet the future needs," he said.

But Szlam foresees that new technology -- such as wireless technology -- will continue to energize the industry. He envisions unifying all channels of communication with systems that feature "intelligent" e-mail readers that will automate responses.

Some companies even expect robust growth in 2001 as a result of their successful new technologies.

Atlanta-based Retail Solutions, a division of Dayton, Ohio-based NCR Corp., produces the self-serve checkouts springing up at grocery stores and other innovations such as in-store Web kiosks. 

Tony Fano, Retail Solutions' senior vice president, is optimistic about the company's future growth. While the devices seem futuristic, the goal is to recreate the old-time feeling of a neighborhood store by giving retailers the tools to know their customers' buying habits.

Despite the optimism of some companies, the shocks of falling stocks and stalled IPOs have affected some respected companies.

After its stock shares fell 98 percent, Atlanta-based iXL Enterprises Inc. announced in November plans to cut its workforce by 35 percent, firing more than 1,000 employees to reduce costs and reach profitability.

RealEstate.com reportedly laid off 50 employees as of Nov. 6, and several employees have quit, leaving its Atlanta Financial Center offices virtually empty. 

Hopes for an IPO have evaporated.

Obviously, these events reflect a slowdown in Atlanta's technology sector, but analysts are not predicting doom and gloom for 2001.

"There's no question that high-tech was driving a lot of the growth in the Atlanta area," said Mary Kassis, associate director at Georgia State University's Economic Forecasting Center. 

"That sector is still growing, just not at the same pace, in part because of the problems in the high-tech industry and in part also to some overall slowing of the economy."

Strong job growth

While Georgia doesn't have a category called "technology companies" when it collects data, the usual categories that apply are "computer and data processing" and "engineering and management consulting." 

In 1999, those sectors showed strong employment growth: computers and data processing was up 12.2 percent from 1998 and engineering and management consulting was up 9.7 percent. That's well ahead of Atlanta's overall job-growth average of 5.2 percent in the same period.

"I fully expect this area to continue to grow and prosper," said Antley, who looks at it as a what-goes-up-must-come-down sort of situation, with a touch of wistfulness in his voice for the "up" times. "It was extraordinary," he said.

Judith Potwora is a contributing writer for the Atlanta Business Chronicle. Reach her at atlantatechbiz@bizjournals.com.

Origins

In the annals of corporate history, one name stands out as a prime example of promise turned to ruin – Divine, Inc. (referred to as "Divine" or the "Company"). Founded in 1999 by its charismatic leader, Filip Filipowski, Divine was envisioned as an internet holding company, a sanctuary for innovative ideas and a hub for business-to-business e-commerce through a consortium of affiliated enterprises. 

Its origins, however, are traced back to the remarkable success of Filipowski's previous venture, PLATINUM Technology, Inc. ("Platinum"), a company that had been sold for a staggering $3.6 billion in 1999. 

The irony of Divine's eventual downfall was stark, considering the towering heights from which it had plummeted.

Filip Filipowski's leadership style, once celebrated for its ingenuity, began to show signs of ethical erosion. His close-knit team, including figures like Humenansky, Cullinane, and Sullivan, who had all previously collaborated at Platinum, were appointed to key positions within Divine. 

This alignment of past colleagues, however, would eventually play a significant role in the Company's undoing.

Divine Begining

Filipowski, retaining his role as Chief Executive Officer and Board Member, set the trajectory of Divine's journey. 

Humenansky, serving as President and Chief Operating Officer, and Cullinane, as Chief Financial Officer, formed the triumvirate that was tasked with navigating Divine through uncharted waters. 

Sullivan, an integral figure from Platinum's legal counsel, assumed the role of Secretary and General Counsel.

Mission

Divine's mission was ambitious – it touted itself as an 'incubator' company, promising to guide and elevate companies within its portfolio toward public offerings. With the fervor of the dot-com era, Divine managed to amass over $100 million in its initial public offering (IPO) in July 2000. 

Simultaneously, the Company accumulated interests in more than 50 affiliated enterprises, the "Associated Companies," as part of its incubator strategy.

2000

However, the IPO market's rapid deterioration in 2000 cast a shadow over Divine's aspirations. 

Despite its grand ambitions, the Company failed to shepherd any of its Associated Companies to a successful IPO. The stark reality was inescapable – Divine's incubator model, once seen as innovative, had faltered under the weight of market turbulence and internal mismanagement.

The downfall of Divine was a tale of hubris and ethical lapses. 

The very leaders who had orchestrated Divine's ascent had seemingly lost their moral compass, steering the Company into a maelstrom of misguided decisions and questionable practices. 

Divine's failure, thus, serves as a stark reminder that even the most promising endeavors can crumble when leadership forsakes its ethical moorings. 

The legacy of Divine stands as a testament to the consequences of unchecked ambition and the corrosive power of unethical behavior within the corporate world.

As Divine ventured into the new millennium, the glittering promise it once held was tarnishing rapidly. By the waning months of 2000, a consensus was forming within the management echelons that the once-celebrated incubator concept had faltered, leaving Divine's future hanging in uncertainty. 

2001

The need for a drastic change was palpable, and in February 2001, the Company announced a bold pivot. The strategy was to transition towards the acquisition of companies entrenched in the realm of 'Enterprise Web Solutions.' 

The ambition was to amalgamate these newly acquired entities, along with their offerings, into Divine's existing portfolio of products and services.

However, this strategic shift was rife with operational and integration complexities. Divine's existing infrastructure, encompassing development, marketing, sales, and support channels, was in its fledgling stages and demanded substantial nurturing and integration efforts. 

This predicament was further exacerbated by Divine's rapid, almost frenzied, implementation of the new strategy throughout 2001. 

During this period, Divine acquired a staggering 20 companies, expending nearly $21 million in cash, issuing over 230 million shares of common stock, and saddling itself with a burden of over $85 million in debt.

Divine's acquisition frenzy was akin to a storm sweeping up financially distressed companies with their own operational troubles. The allure of seemingly augmented revenues from these acquisitions often obscured the reality that the path to profitability remained elusive. 

Throughout the initial three quarters of 2001, Divine continued to hemorrhage operating losses, and the cumulative toll surpassed a staggering $175 million.

At the helm of this tumultuous expansion strategy was Filip Filipowski, unflinchingly devoted to the notion of growth through acquisition. 

However, this dogged pursuit was increasingly met with skepticism and dissent within the ranks of Divine's management. The toll of the acquisition spree was evident in the financial toll it took, the adverse impact on cash flow, and the operational morass that came with each acquisition.

As the financial struggles deepened and the cracks in the acquisition-focused strategy grew wider, those within Divine's management ranks attempted to recalibrate Filipowski's focus towards shoring up existing operations instead of perpetually seeking out new acquisitions. 

The internal friction that had been building now found a voice, with growing concerns about the company's direction and financial viability.

Divine's once-cohesive facade was beginning to fracture under the weight of financial instability, operational challenges, and a leadership strategy that seemed increasingly out of touch. 

The story of Divine's descent into chaos stands as a stark example of how a promising venture can crumble when leaders cling stubbornly to a flawed vision, ignoring the dissenting voices within and allowing unethical behavior to permeate decision-making. 

It serves as a cautionary tale for the business world, highlighting the perils of unchecked ambition and the consequences of poor leadership.

Amidst the growing storm of Divine's financial woes, one pivotal chapter emerged in the form of an ill-fated acquisition - RoweCom, Inc. This company, RoweCom, specialized in managing library orders for publications, acting as an intermediary between publishers and libraries, and providing customer services. 

Despite the fact that RoweCom's operations didn't naturally align with Divine's existing business domains, its inclusion under Divine's umbrella artificially bolstered the appearance of the Company's gross revenues. 

But beneath this facade lay a different story.

RoweCom, plagued by financial distress, had operated at a loss for years. Its business model resulted in cyclical cash flows due to the timing of payments made to publishers for subscription orders. 

Typically, RoweCom paid publishers in December or January each year, leading to a cash shortfall in the fourth quarter when payments to publishers exceeded collections from customers. 

Despite the inherent financial challenges of RoweCom's model and its lack of synergy with Divine, the acquisition proceeded. This decision, driven by a leadership blinded to the red flags, was to have severe repercussions.

Key members within Divine, including Humenansky and Sullivan, voiced their reservations about the RoweCom acquisition through email correspondence with Filipowski. 

Humenansky's apprehension was explicit: "I become less and less sure of this acquisition every day that goes by since I just don't see a lot of benefit versus a lot of work. All others are right on, but this one I have a really bad feeling about." 

Sullivan, too, highlighted the deteriorating financial position of RoweCom, cautioning the management team about the gravity of the situation.

Despite the counsel of those within Divine who saw the pitfalls, the acquisition of RoweCom proceeded on November 6, 2001. This decision marked a pivotal turning point, plunging Divine further into financial turmoil and placing the Company in the precarious zone of insolvency as of November 30, 2001.

2002

In the wake of the RoweCom acquisition, the pattern of ill-conceived acquisitions persisted. 

In a span of months, Divine added more companies to its portfolio, including - 

Northern Light Technology, 

Real World Technology Corporation, 

Perceptual Robotics, Inc., 

Net Unlimited, Denalii, Inc., 

Delano Technology, Inc., and 

Viant Corporation. 

These acquisitions, rather than delivering the anticipated benefits, exacerbated Divine's economic and operational challenges.

Throughout this tumultuous period, Divine's leadership was well aware of the unfolding problems. 

The Company's managers repeatedly tried to steer Filipowski's focus toward managing the operations rather than perpetuating the acquisitions spree. 

Yet, their concerns fell on deaf ears. 

Despite the glaring warnings about Divine's deteriorating financial condition and the misgivings of his own senior management team, Filipowski remained fixated on acquisitions.

In a striking display of the disconnect between leadership and reality, 

Divine's management repeatedly alerted Filipowski to the brewing crisis. 

However, he dismissed their opinions, or at best, granted them marginal consideration. While the management's concerns grew louder, the leadership's blindness and inaction persisted.

The situation painted a picture of a once-promising company spiraling into self-inflicted chaos. 

Divine's story serves as a poignant reminder of the corrosive effects of poor leadership and unethical behavior, where disregard for financial prudence and a refusal to heed internal dissent can steer even the most promising ventures toward an inevitable downfall.

Amidst the mounting financial turmoil, a pivotal moment arrived in the first quarter of 2002 when Filip Filipowski, Divine's leader, stood before the Board of Directors with a rosy projection. 

His presentation painted a picture of impending profitability for the Company by the end of the year. 

The projections, however, weren't grounded in reality. They showed the Company boasting a cash reserve of $83 million at the close of the first quarter, a figure that would later be revealed to be far from achievable.

Sullivan, a key figure within the Company, would later attest that these projections were not reflective of feasible revenue targets. According to Sullivan, these overly optimistic numbers were presented to the Board against the objections of key officers, including Humenansky. 

Their intent was to secure the Board's approval, but the revenue plans attached to these projections far exceeded what was realistically attainable.

However, by mid-March 2002, it became apparent that Divine's actual operating results were diverging drastically from the presented projections. This triggered debates among the leadership team about the accuracy of the projections to be presented to the Board for the subsequent quarter. 

The leaders found themselves grappling over the content of financial materials to be shared with the Directors.

Filipowski, ever determined to maintain an optimistic facade, began proposing ways to make the numbers appear more favorable to the Board. 

Humenansky, recognizing the risks involved, raised his concerns, deeming the projections already too aggressive. Despite this, Filipowski asserted his authority, making it clear that the final decision rested with him. 

Humenansky reluctantly conceded that it was indeed Filipowski's prerogative.

The projections that Filipowski insisted on presenting to the Board were inflated and lacked substantive support. 

Despite the disagreements within the management team about the validity of these projections, the leadership failed to communicate the controversy to the Board. 

As a result, Divine reported a cash balance of $78.1 million for the first quarter of 2002, a figure that deviated by only a small margin from the initially projected $83 million. Sullivan later revealed that this achievement was partially due to Divine's tactic of withholding payments for accounts payable.

Yet, the Company's financial struggles persisted. In January 2002,

Humenansky had warned Filipowski about Divine's deteriorating cash position. He cautioned that the Company's financial resources were running dangerously low, rendering further acquisitions unfeasible due to the ongoing depletion of cash reserves. 

Forced into a corner, Divine's leadership shifted their strategy from acquiring businesses aligned with Divine's vision to pursuing acquisitions as a means of boosting the Company's dwindling cash balance.

In February 2002, Divine's management laid bare their urgent need to raise cash in a detailed presentation to the Board. They highlighted the absence of a solid operating history, the perception of the Company as a high-risk entity in the market, and the pressing need to meet revenue targets. 

However, this strategic shift to bolstering cash reserves was only a temporary remedy for the deeper issues afflicting Divine. The Company's downward spiral continued, driven by poor decisions, inflated projections, and a lack of ethical stewardship from the leaders at the helm.

As Divine's financial predicament deepened, the Company's insolvency became a glaring reality by the close of the first quarter in 2002. The value of its assets fell short of its liabilities, marking a crucial turning point. 

Yet, despite this alarming fact, Filip Filipowski remained unswervingly committed to his acquisition-centric strategy, proclaiming the need to acquire cash "even at drill bit prices." 

This fervor for acquisitions was to have dire consequences.

Undeterred by the financial abyss facing the Company, Divine plunged into further acquisitions, including Viant and Delano, with the aim of boosting its cash reserves. 

Despite the warning signs, Filipowski was undeterred. His emphasis on acquiring cash at all costs led Divine to proceed with these transactions, even as the internal dissent grew louder.

The acquisition of Viant, despite the concerns voiced by Humenansky, was approved by the leadership team. Humenansky's initial response was disbelief, later asserting that Viant had no pipeline and was planning to lay off a significant portion of its workforce. 

Despite these reservations, the acquisition was completed on September 27, 2002, with Filipowski, Humenansky, and Cullinane voting in favor. The expected addition of over $80 million in cash to Divine's balance sheet, however, proved to be a mirage, as the actual cash gain amounted to a mere $6.9 million.

Similarly, the Delano transaction echoed the same concerns and internal turmoil. Humenansky's scrutiny uncovered revenue discrepancies within Delano's figures. 

Even more remarkably, Aleksander Szlam, Divine's Chief Strategy Officer, unequivocally voiced his opposition to the Delano deal, predicting that it would "kill" Divine. 

Despite this foreboding warning from Szlam, the Company proceeded with the acquisition on July 31, 2002, with Filipowski, Humenansky, and Cullinane again voting in favor. 

The acquisition of Delano, intended to bolster Divine's cash holdings, ended up adding a paltry $4.8 million to the Company's balance sheet.

Throughout this tumultuous period, a disturbing pattern emerged. 

The Company's leadership, including Filipowski, Humenansky, and Cullinane, consistently failed to communicate their reservations and concerns to the Board of Directors. The Board minutes remained devoid of any mention of the dissent and warnings from within the leadership team. 

This failure to convey critical information to the Board painted a picture of a leadership group that either chose to downplay the challenges or actively withheld vital information.

Divine's trajectory was one of a once-promising company descending into financial chaos due to poor leadership decisions and a propensity for unethical behavior. 

The acquisitions, intended to rescue the Company's ailing financials, only worsened the situation. As Divine's cash reserves continued to dwindle, its leaders remained fixated on superficial solutions, failing to address the systemic issues at the core of the Company's decline. 

The story of Divine stands as a cautionary tale of the devastating consequences that can arise from poor leadership and a culture of unchecked unethical behavior within a once-promising enterprise.

 On the horns of a dilemma 

In the ongoing struggle to salvage Divine's dire financial situation, the Company embarked on investment discussions with Oak Venture Partners ("Oak") in April 2002. Oak offered a glimmer of hope, agreeing to inject $61 million in equity financing in exchange for over 30% of Divine's capital stock. 

The first installment of this investment, amounting to $22.9 million, arrived in May 2002, followed by an additional $38.7 million in July. Despite these substantial investments, Divine's insolvency remained unaddressed, and operational issues continued to plague the Company. 

The relentless pace of acquisitions had taken a toll, making the integration of operations a daunting challenge.

The consequences of Divine's acquisition spree reverberated in the form of employee terminations, necessitated by the closure of each acquisition. This not only led to hefty severance costs for Divine but also proved that the acquired companies were delivering minimal value to the overall enterprise.

By April 2002, Divine's precarious financial position had the Board grappling with the fiduciary responsibilities of a corporation operating within the "zone of insolvency." 

During a board meeting, Filip Filipowski, along with Cullinane and Humenansky, assured the Board that the expense and revenue targets they had presented were both attainable and reasonable. 

Based on this assurance, the Board concluded that Divine should continue to operate under its existing plan, believing that all relevant stakeholders would be best served by this course of action.

Humenansky's growing dissatisfaction and concerns reached a tipping point. In April 2002, he informed Filipowski of his readiness to step away from Divine, citing his disagreements with the Company's direction. 

Over the course of May 2002, Humenansky continued to voice his mounting worries about customer issues, employee retention problems, and an overarching sense of failure within the organization. His frustration was palpable in his messages, such as "I can't run the business going forward... I'm at the end of my rope now." 

Despite these statements, Humenansky remained with Divine until after the Company filed for bankruptcy.

Meanwhile, a concerning situation arose in connection with Divine's earlier acquisition of Eshare Communications. Alekzander Szlam, Eshare's Chief Executive Officer, exercised his "put" options, which allowed him to sell a significant number of Divine's common stock at a cost of nearly $6.2 million to Divine. 

The leaders of Divine, including Filipowski, failed to inform the Board about this development until after Divine's Audit Committee Meeting on May 1, 2002. This delayed disclosure led to the resignation of an outside director from the Company, further underscoring the discord and lack of transparency within Divine's leadership.

The story of Divine's downfall was one marked by a series of questionable acquisitions, unrealistic projections, and a widening gap between leadership decisions and the Company's actual financial health. 

The refusal to heed internal concerns and a failure to act ethically and transparently ultimately drove Divine's once-promising future to a state of complete disarray.

As Divine's financial turmoil deepened, another distressing incident emerged involving RoweCom France. 

On May 23, 2002, Ken Mueller, the Company's controller, communicated a significant concern to Filip Filipowski, Chris Humenansky, and Patrick Cullinane. Mueller outlined that RoweCom France had accrued liabilities of over $12 million due to overdrafts, putting the company in a precarious financial position. The auditors advised Divine to declare RoweCom France insolvent, given its inability to repay these obligations.

Mueller provided a detailed account of the financial implications of RoweCom France's overdrafts on Divine's subsequent quarters, stressing the potential impact. In response, Filipowski's dismissive reply was concerning: "Less of an issue after Oak and Viant is [sic] done." 

This response seemed to indicate that Filipowski saw the issue as less critical once the Oak and Viant deals were finalized.

Curiously, despite the urgency of the RoweCom France situation, none of the Leadership shared this information with the Board before a scheduled Board Meeting on May 23, 2002. Instead, the Leadership proceeded with the meeting, which included discussions about the fiduciary duties of directors in a corporation within the "zone of insolvency."

At this meeting, the Leadership advocated for continuing discussions about the implications of being in the "zone of insolvency." 

The Board eventually reached the conclusion that Divine should persist with its existing operating plan, believing this to be in the best interest of all relevant stakeholders. However, this decision was reached without the Board's knowledge of RoweCom France's insolvency.

Throughout the year 2002, discussions about Divine's financial predicament and its position within the "zone of insolvency" were frequent topics during Board meetings. 

These discussions occurred on April 1, May 13, May 23, and August 14. 

Despite these conversations, the consensus remained the same: the Board believed that operating under the current plan was the best course of action, given the rights and interests of Divine's constituencies.

Notably, there's no record indicating that any of the Leadership directly addressed the Board during these meetings to provide a transparent account of Divine's actual economic condition. 

This lack of candor from the leadership perpetuated an environment of incomplete information and failed to convey the true extent of Divine's financial struggles.

The narrative of Divine's decline continued to reveal a pattern of inadequate communication, unchecked decision-making, and a lack of transparency. 

The leadership's failure to disclose critical financial information to the Board highlighted a growing rift between the company's true economic state and the leadership's portrayal of it. 

The once-promising company's unraveling was driven not only by poor decisions and reckless acquisitions but also by a leadership culture that seemed to prioritize short-term appearances over ethical stewardship and responsible management.

As Divine's troubles escalated, a series of pivotal events marked the downward spiral of the once-promising company. 

Beginning of the end

In July 2002, recognizing the dire state of affairs, Divine disbanded its Mergers and Acquisitions unit, an action reflective of the failure of its acquisition-centric strategy. Humenansky, amidst the dissolution of the unit, continued to sound the alarm, repeatedly cautioning that the Company was poised to miss its third-quarter projections and would likely encounter severe cash flow challenges in the following quarter.

By the close of the third quarter, Divine's cumulative operating losses had swelled to a staggering $683.7 million since its initial public offering in July 2000. The Company found itself grappling with the impending annual RoweCom publisher payments in the fourth quarter, a financial hurdle it was ill-equipped to overcome.

Entering the fourth quarter of 2002, Divine was in a precarious position. The annual payments to publishers for periodicals ordered by RoweCom's customers loomed large. 

However, the Company lacked the necessary cash or available financing to honor these payments. An unsettling revelation came to light – Divine had been using money from prepaid subscriptions intended for RoweCom's customers to fund its own operations, a practice that only exacerbated its financial turmoil.

Amid negotiations to sell RoweCom and salvage what they could, the Board eventually came to the conclusion that Divine was simply unable to continue supporting RoweCom's operations or fund the year-end publisher payments. 

2003 - The Demise

The inevitable became clear: Divine publicly announced by the end of December 2002 that it could no longer provide financial backing for RoweCom's operations. As a result, on January 27, 2003, RoweCom filed for Chapter 11 bankruptcy.

With Divine and RoweCom now entangled in bankruptcy proceedings, a cascade of repercussions followed. RoweCom filed an adversary proceeding against Divine, seeking damages of over $73 million for various allegations, including claims of "looting" RoweCom. 

The United States Department of Justice and the Securities and Exchange Commission launched investigations into the management practices of both RoweCom and Divine, adding a layer of legal scrutiny to the crisis.

Even before RoweCom's decision to file for bankruptcy, Divine's auditors had warned the Company that they would issue a "going concern" qualification unless a definite operating plan for 2003 was established. 

As the company grappled with its precarious financial situation, it explored various strategic alternatives, including the potential sale of its entire business or individual divisions. Unfortunately, these efforts were in vain as Divine was unable to secure a buyer.

The story of Divine's downfall culminated in a series of catastrophic events – from financial mismanagement and aggressive acquisitions to ethical breaches and legal investigations. 

The promising company had fallen into a state of disarray due to poor leadership decisions, a lack of transparency, and a disregard for the long-term health of the business. 

The legacy of Divine serves as a stark reminder of the consequences that can arise from unchecked unethical behavior and the failure of leadership to act in the best interests of the company and its stakeholders.

( Bankruptcy No. 03-11472-JNF filed in the United States Bankruptcy Court, District of Massachusetts  )

On February 25, 2003, Divine's plight reached its nadir as the company filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code. 

This move marked a formal acknowledgment of the financial ruin that had befallen the once-promising organization. Subsequently, the court consolidated Divine's case with those of its subsidiaries, reflecting the extent of the crisis.

Remarkably, even in the midst of bankruptcy proceedings, Filip Filipowski, Chris Humenansky, and Patrick Cullinane remained employed as officers within Divine. 

Their continued employment was based on the terms outlined in their respective employment agreements. Moreover, they continued to serve as directors until the effective date of the bankruptcy reorganization plan.

As part of the bankruptcy process, Divine made a significant decision: On May 15, 2003, the company sold off the majority of its assets. 

This marked a turning point in the attempt to salvage what remained of the business. 

However, the ensuing months were not without controversy.

On May 22, 2003, Divine filed a motion seeking court authorization to reject the executory employment agreements held by Filipowski, Humenansky, and Cullinane. 

In response, the three executives raised objections, claiming that the company had already terminated their employment prior to this motion. The situation was complicated by the fact that each of these employment agreements stipulated substantial payments in the event of termination.

The crux of the matter lay in the timing and implications of these terminations. 

The plaintiff alleged that Filipowski, Humenansky, and Cullinane deliberately timed the terminations of their employment agreements to exploit a legal loophole. By doing so, they seemingly aimed to categorize the termination payments as administrative expense claims against Divine's bankruptcy estate. 

This would come at the expense of the general unsecured creditors, adding an element of controversy to the executives' actions during the bankruptcy proceedings.

In line with their assertions, the defendants, Filipowski, Humenansky, and Cullinane, filed a series of proofs of claim, outlining various forms of damages and administrative expense claims. 

These claims included compensation for the termination of their employment agreements, indemnification for legal expenses incurred in connection with their roles as officers and directors of Divine, and reimbursement for general expenses.

This stage of Divine's story underscores the complex legal and financial battles that can arise in the aftermath of a company's downfall. 

The executives' actions in the bankruptcy proceedings raise questions about their intentions and motivations, casting a shadow over their leadership and decision-making during the tumultuous period leading up to Divine's ultimate demise.

NOTE:  (from the conclusion of the listed leaders challenge - "The Court will not address Counts XV or XVI as none of the Defendants asserted grounds for dismissal of those Counts. For the above-stated reasons, the Court denies the Motions to Dismiss in their entirety except for Count VII and those portions of Counts I through III which relate to the alleged misrepresentation by Filipowski, Humenansky, and Cullinane of their interest and gain from the *55 transactions enumerated in ¶¶ 267, 278 and 289 of the Complaint. Upon the filing of answers *458 by the Defendants, the Court will issue a pre-trial order."

The rest is history.