Good life goes on despite big debt
A father and son leave creditors and workers angry as their Palm Harbor firm folds.
By Scott Barancik
Published March 7, 2007
Two executives who closed their struggling Palm Harbor company last year have left Florida to help form a new venture. But paying off old creditors isn't part of their game plan.
Hugh "H.T." Grinnon and son Jonathan Grinnon both filed for Chapter 7 bankruptcy protection in New York last month. Their goal: to erase $3-million and $11-million in debts, respectively. Both had personally guaranteed loans that their group-travel company, CMI Network Inc., later defaulted on.
Ex-CEO Hugh Grinnon, 57, claims he has just $6,850 in personal assets and only $110 per month in disposable income after paying basic expenses. He and ex-CFO Jonathan Grinnon, 30, declined to be interviewed for this report.
But getting a judge to waive the debts may not be so easy. Creditors such as First Priority Bank, a Bradenton lender that is owed $1.1-million, are expected to sue the guarantors. Meanwhile, angry ex-employees are praying for the pair's comeuppance.
"While Jonathan Grinnon was out buying a Mercedes and a new boat, his employees were wondering if their next paycheck was good or not," said Connecticut resident Gail Gunzy, whose daughter worked at CMI. "I hope they see their day in court."
Portrayed both by admirers and detractors as a consummate salesman, Hugh Grinnon didn't take long to build CMI into an 80-employee company with multiple U.S. offices. But when CMI's cash reserves ran low, its creditors began suing. One was Honeywell International, which accused Grinnon and his company of "apparently absconding" with $760,000 in Honeywell funds that were to be used to reserve hotel rooms.
Despite CMI's fall, the Grinnons continue to live comfortably. Jonathan drives a $1,300-a-month Mercedes, lives in a $2,050-a-month apartment in suburban Virginia and earns $10,000 per month as vice president of finance at Cornerstone Marketing Solutions Inc., a Bethesda, Md., company that helps clients motivate employees. Hugh also drives a Mercedes, shares a Long Island colonial worth $775,000 with his wife, and earns $7,000 per month as a consultant, according to court filings.
But there were a few omissions in Hugh Grinnon's bankruptcy filing. Asked to list recent lawsuits in which he's a party, he failed to note Honeywell's. Asked to list all companies in which he recently served as an officer, director, partner or equity holder, Grinnon didn't mention CMI Network.
Neither did he cite any connection to, or income from, Cornerstone Marketing. According to son Tom Grinnon's page on MySpace.com, all three Grinnon sons work there along with their father, just like at CMI.
Another curiosity, perhaps easily explained, concerns Hugh Grinnon's home. Though he pays $3,000 a month for it, the deed is held by Tom Grinnon, who paid $455,000 for it in 2003 at age 25.
Times staff researcher Caryn Baird contributed to this report. Scott Barancik can be reached at barancik@sptimes.com or 727 893-8751.
Thomas Grinnon's MySpace.com page