The Elbert Files: Final chapter on Myers' failure
Friday, May 09, 2014 7:00 AM
A friend recently called my attention to a newsworthy bankruptcy court action that occurred four months ago but had not been covered by local media. The lack of coverage was not the result of any conspiracy or confidential agreements. It was just one of those cases that occasionally fall through the cracks.
The case involved Robin Myers, the wife of discredited home builder Jamie Myers, the guy who took over his father’s construction business, Regency Homes, and overextended it to the point that it crashed spectacularly in 2007.
The Regency failure hurt a lot of people, including dozens of subcontractors who had built their businesses around Myers’ unfulfilled promises. It also put a dent in the balance sheets of several banks and emptied the pockets of private investors, although it was difficult to feel sorry for financial professionals who should have been able to read the signs of greed and overreaching.
It has taken years to sort out the mess.
Jamie Myers filed for personal bankruptcy in 2009, listing debts totaling $183 million and assets of just over $1 million. There were several allegations of fraud, but the final ruling was that Myers was only guilty of being greedy and a poor manager of other people’s money. His case was closed Oct. 2, 2012.
Less than a year later in September 2013, Robin Myers, who had not been a party to her husband’s bankruptcy, filed her own petition for bankruptcy court protection, listing debts of just over $1.25 million and assets of just over $560,000.
The shortfall was about $690,000. That’s a significant number as you’ll see in a minute.
The most interesting thing about her case was that the bankruptcy court trustee asked the court to change it from a Chapter 7 liquidation bankruptcy to a Chapter 11 reorganization proceeding.
Such a change is not unheard of, but it is rare, especially for individuals. It typically happens when the court decides there are assets or income that can be used over time to make a more complete reimbursement to creditors.
In Robin Myers case, the trustee, Des Moines lawyer Donald Neiman, took a look at Myers’ financial statement and determined there was a rather obvious way to pay off most of the $690,000 in debt that she wanted discharged.
Myers’ financial form showed the couple had average income of $17,800 a month and that their living expenses were only about $7,400 a month, leaving a net of $10,400 a month.
Neiman determined that over a period of five years, that $10,400 a month would total $624,000 and go a long way toward wiping out the $690,000 debt.
So, the trustee filed a motion asking the court to convert the case to a Chapter 11 bankruptcy and apply $10,400 a month to reducing the $690,000 debt.
Robin Myers’ lawyer, Steven Wandro, who had also handled Jamie Myers’ bankruptcy, objected. Wandro noted that only about $600 of the $17,800 in monthly income came from Robin Myers.
The rest came from Jamie Myers, who said on the disclosure form that he earned $5,000 a month from consulting and $12,200 a month from other unspecified sources.
Wandro said it was not fair to count on Jamie Myers’ income to pay Robin’s debts, even though some of them were tied to Jamie Myers business failures.
“Other than through good will and generosity of the non-filing spouse, Robin Myers does not have access to his income,” Wandro said.
And even if some of the debt was tied to Jamie Myers’ businesses, he had already been discharged from those debts by his own bankruptcy court action, Wandro said.
In January, Judge Lee Jackwig agreed with Wandro, which means that Robin Myers’ unpaid $690,000 in debts will be completely written off as part of her Chapter 7 bankruptcy.
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