EBaum World partner declares bankruptcy

Will Astor//July 24, 2015//

Listen to this article

Entrepreneur Neil Bauman has filed a personal bankruptcy.

A colorful figure, Bauman grabbed headlines over the past decade as a downtown property owner vocally opposed to the now shelved Renaissance Square, a partner in a dot-com venture his son Eric started while still in high school that sold for tens of millions of dollars, and a real estate developer with a plan to create an upscale retail center on the village of Webster’s main drag.

The incomplete eight-page Chapter 7 petition he filed last week in the Rochester division of the Western District of New York Bankruptcy Court is a last-ditch move to keep the Internal Revenue Service at bay, Bauman said in an interview this week.

Bauman’s July 16 bankruptcy petition does not include most of the personal and financial disclosures filers are asked to detail in documents that typically run to 30 or 40 pages.

While it details back-tax debts of $99,834 Bauman owes to the Internal Revenue Service and $1,788 owed to New York’s taxing authority, his bankruptcy petition does not include schedules that are supposed detail Bauman’s current income, assets and business interests.

The missing details would be forthcoming when his lawyer, Brighton attorney Sammy Feldman of Silver & Feldman, adds the missing schedules, Bauman promised. The petition was filed in haste as the IRS was getting ready to move against him after longstanding negotiations to resolve the disputed federal tax liability broke down, he explained.

Bauman’s personal tax debt, which goes back some eight years, traces to the 2007 sale of his son’s dot-com venture, eBaum World Inc. Interest and penalties on taxes levied on income he was supposed to get as part of the sale but never actually received account for most of the tax liability, he said.

Aged 27 when the 2007 deal closed, Eric Bauman had started the venture, a website that aggregated comedy and humor clips, as a 16-year old high school student.

By 2007, eBaum World employed 30. In 2006, it brought in revenues of $5.2 million and booked pre-tax net income of $1.6 million.

The Internet venture was acquired by San Francisco-based HandHeld Entertainment Inc. for $17.5 million in cash and HandHeld stock. The deal called for the Baumans to collect additional stock and cash payments worth another $32.5 million in succeeding years.

But like many dot-com ventures, HandHeld, initially a seller of an MP3-type device, faltered and finally went under.

The cash payments called for in the 2007 deal “didn’t happen, which made things very difficult for the past three or four years,” Bauman said.

The Chapter 7 filing will wipe out his federal tax debt, Bauman hopes.

While the Bankruptcy Code does not allow discharge of some tax debt, it allows for federal tax debt obligations to be wiped clean in a Chapter 7 case if three conditions apply:

Taxes were due at least three years before the bankruptcy was filed;
The petitioner filed a tax return two years or more before filing the bankruptcy; and
The IRS determined the taxes in question were owed more than 240 days before the bankruptcy filing.

His case meets those criteria, Bauman said.

Bauman’s personal bankruptcy filing follows two Chapter 11 petitions filed by eBaum Webster Ventures LLC in hopes of fending off Genesee Regional Bank’s foreclosure on the Webster properties.

Both Chapter 11 cases failed, the first after the court threw the case out and the second after eBaum Webster voluntarily withdrew its petition.

A deed in foreclosure filed last December with the Monroe County Clerk shows ownership of the Webster properties to have been transferred to MARRLO Ventures II LLC. An entity whose address is the same as Genesee Regional Bank’s corporate headquarters, MARRLO Ventures was the highest bidder at $2.9 million, the foreclosure deed states.

Eric Bauman currently owns and runs Better Than Pants LLC, a T-shirt store in Webster. In February, he and the store were hit with a trademark infringement complaint for allegedly stepping on a California firm’s registration by selling a dinosaur-themed tee called Sad T-Rex.

Identifying himself as the T-shirt venture’s co-manager, Neil Bauman at the time that Better Than Pants sold Sad T-Rex themed items, but denied any infringement. Court records show case still in progress.

He and his son expect a settlement deal shortly, Bauman said this week.

Otherwise, Bauman added, he is mostly retired.

“I’m collecting Social Security,” he said. “I plan to apply for Medicare soon, and I’m enjoying time with my grandchildren.”