Southern Montana Co-op Members Rage Against Bankruptcy Attorney

The battle to unseat Jon Doak as bankruptcy attorney for Southern Montana Electric Generation and Transmission Cooperative Inc. continued Friday, with a creditor in the case and member of the Southern Montana co-op claiming it’s Doak’s fault that its trustee was disallowed from an October meeting.

Beartooth Electric Cooperative’s trustee, Arlen Boyd, wasn’t allowed to participate “upon Doak’s recommendation” that three other trustees vote against her participation, Beartooth said in court documents.

The board of trustees is composed of a representative from each of the six members of the Southern Montana co-op, and Boyd was appointed to represent Beartooth. But on Oct. 21, when Southern Montana declared bankruptcy, she wasn’t allowed to attend the meeting, the objection said.

Two trustees representing Yellowstone Valley Cooperative Inc. and the city of Great Falls, Mont., left the meeting in protest, saying the three members who voted against allowing Boyd to participate were “acting illegally,” Boyd said in a sworn statement.

It isn’t the first objection to Doak’s representation of Southern Montana in its Chapter 11 bankruptcy case, in which liabilities top $130 million.

Yellowstone Valley, the largest member of the Southern Montana co-op, objected in early November, stating that Doak represents a separate cooperative owned by four members of the Southern Montana Cooperative called SME. (Yellowstone Valley and Great Falls aren’t a part of the SME co-op.) This representation is a conflict of interest, Yellowstone argued.

Additionally, Doak is a creditor in Southern Montana’s bankruptcy, Yellowstone said, because of he is owed legal fees from that representation, meaning he’s not a “disinterested party” as required.

Southern Montana called Yellowstone’s objection another chapter in its bid to exit its contract by causing Southern Montana to liquidate, according to court documents, accusing it of illegally making public confidential Southern Montana financial statements.

After this response was filed, Great Falls filed another objection the next day.

“Testimony at the first meeting of creditors suggests that Mr. Doak and the Doak and Associates may have received preferential payments from the debtor in the 90 days prior to the bankruptcy filing,” the city said in court documents.

Neither Doak nor attorneys for Beartooth or Yellowstone were immediately available for comment Monday.

The hearing on Doak’s application to represent Southern Montana was postponed in December and is scheduled for Jan. 24 in the U.S. Bankruptcy Court in Butte, Mont.