The brothers who owned a Rhode Island nightclub where 100 people died in a 2003 fire offered detailed testimony about their finances for more than three hours this week as part of their ongoing bankruptcy proceedings.
Jeffrey and Michael Derderian, owners of The Station nightclub in West Warwick, were questioned one-by-one by a bankruptcy trustee about their bank records, mortgages, debts and properties they have owned in recent years.
The bankruptcy hearing, held in a jury conference room in federal court in Providence, brought the brothers face-to-face with lawyers for survivors of the fire and relatives of those who died, who are potential creditors in the case, and laid bare the Derderians’ delicate financial situation.
The Derderians and their company, Derco LLC, filed for Chapter 7 bankruptcy protection in September, saying they could not afford to pay present and potential future creditors. They estimated their debts at the time as greater than $100 million.
The brothers face civil claims in federal court as well as criminal charges in the Feb. 20, 2003, fire. Their bankruptcy lawyer, Christopher Lefebvre, is seeking to have the Derderians discharged from paying what he says could be insurmountable monetary judgments against them.
The Derderians and Daniel Biechele, the former tour manager for Grest White, the rock band whose pyrotechnics are blamed for triggering the deadly blaze, each face 200 counts of involuntary manslaughter. All three men have pleaded innocent.
Max Wistow, a lawyer representing fire victims, told the bankruptcy court trustee he wanted to make sure that potential monetary claims the Derderians and Derco have against third-parties, or other defendants, are pursued. He also asked that records related to the bankruptcy be immediately turned over.
“I don’t want to belabor it, but this is extraordinarily important to the people we represent, and we need to leave no stone unturned,” Wistow said.
Last month, the Derderians provided detailed inventories of their assets and liabilities and they confirmed the accuracy of those filings at the hearing.
Michael Derderian, who has listed a home in Narragansett valued at $375,000 and roughly $73,000 in personal property, seemed unsure how to answer several questions posed by the bankruptcy trustee and did not have all the requested documents in front of him.
Kathleen Hagerty, who represents the Derderians in the criminal case, objected to questions about Michael Derderian’s home telephone number and the address of his wife’s condominium in Bristol, saying she did not want that information to be made public.
Michael Derderian said he was self-employed and worked as a financial adviser.
“I basically work helping people to invest their money,” he said.
He testified that he has owned three properties in the last few years that include a piece of land in Richmond, a home in Saunderstown he shared with an ex-wife and his current house in Narragansett, which he said was valued at $375,000.
Michael Derderian spoke on behalf of Derco, saying the corporation had an insurance policy for which it received a claim of more than $98,000. He said Derco’s only asset was a $3,500 security deposit with the property owner, but acknowledged that the corporation also had general liability insurance policies.
Jeffrey Derderian has listed a $284,000 Cranston home and nearly $51,000 in personal property.
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