JK Harris in liquidation

JK Harris


JK Harris & Co., at one point a nationwide firm offering to settle people's tax debts for pennies on the dollar, came to a humble end in a Charleston courtroom Tuesday.

Dogged by consumer complaints and large legal settlements, deeply in debt and unable to find a way out, the Goose Creek-based company's proposed bankruptcy restructuring was converted to a liquidation. A trustee has been assigned to scrounge up what assets she can find to repay creditors.

Many creditors, including consumers who are collectively owed millions from settlements of claims that the company misled them, will get nothing.

JK Harris filed for bankruptcy protection in October to pre-empt an effort by the Texas attorney general to force the company into receivership. After failing to sell or reorganize the company, the business closed its remaining offices about two weeks ago, putting more than 100 local employees out of work.

Some employees were previously laid off, when the bankruptcy was filed, and are wondering if and when they will get wages they are due. "My whole thing is, I loved working for JK Harris, but I had to take out a title loan on my car because I'm waiting for this money I'm owed," said Nicole Hagan, a single mother of three in Goose Creek.

At the time of the shutdown, the company had thousands of clients, many of whom were counting on the firm to help them resolve problems with the Internal Revenue Service. For a fee, typically several thousand dollars, the company offered to help clients pursue IRS settlements known as offers in compromise.

"I don't have the money to pay another lawyer," said Todd Bilodeau, a landscaper in New Hampshire. "I'm just looking for someone to help me here."

"We've got time-sensitive stuff, and we don't know what we're going to do," he said in a phone call to The Post and Courier.

The consumer actions against the company -- more than 20 attorneys general took steps against the firm -- were related to claims JK Harris took money from clients who could not qualify for the IRS program.

Columbia attorney Mario Pacella handled a class-action case involving more than 15,000 former JK Harris clients, who together are still owed nearly $4 million from a settlement.

Recent clients who were still working with the company, like Bilodeau, will now have to hire someone else or go through the IRS' "offer in compromise" process on their own.

Company founder and Chief Executive Officer John K. Harris said Tuesday that former employees will be released from noncompete clauses, and could choose to contact former clients and offer to represent them.

Clients who paid the company money for work that wasn't completed will have to get in line with other creditors. Unsecured creditors are expected to leave empty-handed. Most of the company's assets already have been claimed by a New Jersey lender. "There will be no recovery at all for the $20 million in general unsecured claims," said William McCarthy, JK Harris' attorney.

U.S. Bankruptcy Court Chief Judge John E. Waites appointed Michelle Vieira of Myrtle Beach as the trustee to oversee the liquidation.