Judge grants shelter from creditors in Regency-related bankruptcies
Wednesday, May 25, 2011 2:05 PM
The bankruptcy liquidations of two former principals of Regency real estate development and management companies are drawing to a close.
James Myers, son of the late Michael Myers, who co-founded what became the state’s largest home builder and developer of commercial and residential complexes, filed to liquidate his assets under Chapter 7 of the U.S. Bankruptcy Code in October 2009, a little more than a year after several Regency companies folded as a result of the collapse in the housing market.
Myers claimed more than $183 million in debts, the majority linked to bank loans covering failed real estate projects, and $1.1 million in assets.
On May 19, U.S. Bankruptcy Judge Lee Jackwig determined that Myers qualified for protection from his creditors. The ruling came after Myers’ attorney negotiated a settlement of a Minnesota lawsuit and Jackwig dismissed a separate claim against the bankruptcy estate that was filed by a former investment partner.
Attorney Steven Wandro, who represented Myers in the bankruptcy, said his client has made every effort to satisfy the claims of his creditors.
According to the bankruptcy filing, Myers owed $8 million to lenders that held some form of collateral on development loans. Most of that collateral was in the form of property that has been turned over to the lenders, either through court actions or voluntary deed transfers.
Myers also owed more than $175 million to unsecured creditors.
When Regency closed in 2008, it was involved in development projects throughout Iowa and had interests in commercial projects stretching from Michigan to Utah.
Wandro said the Minnesota lawsuit, in which investors in a Minneapolis condominium project claimed that Myers and other partners violated a state securities law when they sold interests in the project, was settled out of court and will be formally dismissed in August.
In another challenge to the bankruptcy, former investment partners Steven and Gayle Nichols and their trust claimed that they were owed more than $874,000 on a $1.5 million loan. The Nicholses claimed the funds were used for expenses they did not authorize. However, Jackwig determined that the Nicholses received adequate financial information that explained how the money was used.
Wandro said the bankruptcy estate will be able to pay an as yet undetermined portion of what is owed to unsecured creditors. A trustee will make the final determination on payouts.
“There will be a distribution to creditors,” Wandro said. “To his credit, he spent three years of his life doing everything he could do to satisfy his creditors.”
In April, Jackwig also discharged the Chapter 7 case of former Regency financial officer John Gamble.
Gamble filed for bankruptcy on Jan. 20, citing $24.6 million in debts, with the majority related to Regency projects, and $225,583 in assets. His bankruptcy attorney, Donald Neiman, said it is doubtful that there will be funds for distribution to creditors.
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