Sale of Interlogic Outsourcing is finalized as owner files for bankruptcy
Interlogic Outsourcing Inc. has been purchased by a Pennsylvania-based payroll firm after IOI’s bankruptcy related to allegations of fraud.
PrimePay agreed to pay $3.5 million for Elkhart-based IOI, with additional payments if payroll revenues exceed certain monthly amounts, according to court documents in IOI’s bankruptcy case.
The company’s CEO, Bill Pellicano, said in a news release that PrimePay is excited to bring “energy, stability and opportunity” to IOI’s clients and employees.
“We understand there have been challenges with IOIPay’s ownership, and it is our promise to guide their clients through this transition as easily as possible,” Pellicano said, “and to develop a longstanding relationship.”
The purchase deal includes IOI’s client list, intellectual property, some physical property and IOI’s employees, which numbered around 170 earlier this year. According to PrimePay’s release, the company is meeting with IOI employees to “embrace them and introduce them to PrimePay’s culture, policies and processes.”
Based in West Chester, Pa., PrimePay has more than 600 employees in offices around the country, and provides payroll and human resources services for more than 40,000 clients.
The sale comes in the wake of accusations of fraud against IOI’s former owner and CEO Najeeb Khan. Earlier this year, KeyBank alleged that Khan intentionally initiated wire transfers that included $122 million that IOI didn’t have. A federal criminal investigation is also underway against him.
Clients also found out later that their federal and state tax payments, which were drawn from bank accounts by IOI, weren’t turned over to tax agencies.
Those revelations and a lawsuit by KeyBank led to IOI declaring bankruptcy, after Khan left the company but remained owner. Nearly 60 IOI clients also launched their own separate lawsuit against Khan over missing tax payments, represented by local attorney and former IOI client Andrew Jones.
Jones said that case is paused, while a judge considers merging the case with the existing IOI bankruptcy case.
Following the closing of IOI’s sale this week, Khan filed for personal bankruptcy in a Michigan federal court. According to that filing, Khan has between $50 million and $100 million in assets, but has liabilities in the range of $100 million to $500 million.
Jones said Khan’s personal bankruptcy won’t absolve him of claims clients make in his case, because bankruptcies don’t allow for the discharging of claims as a result of alleged “intentional criminal acts.”
