Walter’s BK Discussion – What’s happening and what does it all mean?

The following comes from Robert Brower:

Walter Ng filed for Chapter 11 bankruptcy protection
on Thursday afternoon.  Just before Friday’s hearing,
I filed a dismissal of Walter Ng, without prejudice.
This removed Walter Ng from the case and preserved
the McGuire’s rights to go after Walter in bankruptcy
court.
The Judge ruled that the case will proceed with
Dr. Horwitz as the only defendant.  Yesterday,
the parties completed most of the pre-trial motions
and received all of the Court’s pre-trial orders.
There were about 8 investors there to watch the
proceeding.
We will trail another case and when it finishes
go directly to jury selection and trial.  If the first case
does not settle during trial, we expect to go to trial
May 24 or May 25.
We report back to Court on Friday, May 20 at 9:00 am
for a status report and further pre-trial hearing.
Please share your thoughts and theories here.
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16 thoughts on “Walter’s BK Discussion – What’s happening and what does it all mean?

  1. Interesting. If I recall correctly, didn’t this property transfer to “4010 Canyon Partners LLC” in November of 2010. Can anyone confirm? Does anyone know the members of that LLC and the terms of the transfer?

    • Walter and Maribel Ng moved out of 4010 Canyon Road. The house
      was given a minor, low-cost facelift. It was minimally staged for the
      open house. It did not present well. it looked worn, out-dated and
      empty.

      The list price was $2,888,000.

      The house sold and the deed to 4010 Canyon Partners, LLC (a Nevada LLC)
      was recorded on November 5, 2010. The Transfer Tax was not disclosed;
      the buyers wanted to keep the sales price secret because they wanted to
      flip the house after changing its worn and out-dated look.

      The sales price was confirmed by me as $2,025,000.

      The net to Walter Ng was not disclosed but it was less than you might think.
      Walter had taken out a $500,000 line of credit secured by the house.

  2. Judge just signed an Order giving Walter extra time.

    It reads in part;

    1. The Motion is GRANTED.

    2. The time for the Debtor to file the following documents is extended until
    June 2, 2011, or such further date as the Court may order.
    a. Schedules of assets and liabilities (Schedules A, B, C, D, E, and F) and

    Summary of schedules;
    b. Schedule of executory contracts and unexpired leases (Schedule G);
    c. Schedule of co-debtors (Schedule H);
    d. Schedule of current income (Schedule I);
    e. Schedule of current expenditures (Schedule J);
    f. Statement of financial affairs; and
    g. Statement of current monthly income (Form 22).

  3. I am an investor (loser) who needs to be added to the information list. Please include me on all future correspondence.

    Thanks,

  4. Dennis,
    There is no “information list”
    Several investors are going to appear in court
    Wednesdays to help find a way to require Walter
    to give notice to all investors.

    You can file a request for special notice with
    the bankruptcy court as many investors have done.

    See other parts of this blog for discussion on
    how to do that.

  5. Since I will be in court most of the day and cannot blog on penalty of contempt of court I though I would give you all some thing to research, are there any connections or similaraties here?

    $900M Lawsuit Filed Against Mortgages Ltd., Radical Bunny Executives, Greenberg Traurig,
    Quarles & Brady Law Firms
    May 13th, 2010

    See if there are any connections here.

    http://equitatus.wordpress.com/2011/06/16/radical-bunny-greenberg-traurig-arizona-rip-off/

    • FYI – update from The Deal…

      Share Print Reprint Save to My Articles

      R.E. Loans’ DIP status to be resolved Nov. 17
      By Kelsey Butler Updated 05:49 PM, Nov-07-2011 ET
      Bankrupt mortgage company R.E. Loans LLC is headed to a Nov. 17 status conference that will determine whether the company can use $21.5 million in postpetition financing.

      According to debtor counsel Holland O’Neil of Gardere Wynne Sewell LLP, a final hearing on the financing will be set at the conference or a deal that resolves objections made by the creditors’ committee to the DIP loan will be finalized.

      Judge Barbara Houser of the U.S. Bankruptcy Court for the Northern District of Texas in Dallas on Nov. 2 signed a third interim order approving the financing from Wells Fargo Bank NA. R.E. Loans now has access to a maximum of $2.9 million until a final hearing on the financing, court papers said.

      Houser on Sept. 16 first approved interim use of $1.7 million of the DIP.

      The official committee of unsecured creditors on Oct. 13 filed an objection to final approval of the DIP loan.

      In court papers, the creditors’ committee said Wells Fargo is “by all accounts oversecured” and “appears calculated to drive the debtors into a forced liquidation that will result in little or no recovery for noteholders, who are owed in excess of $750 million.”

      The committee said that the most egregious provision of the loan is the requirement that the debtor liquidate collateral to meet certain milestones set up under the terms of the DIP.

      The debtor must hand over at least $25 million in cash proceeds to Wells Fargo by Jan. 31 or it could terminate the DIP. Additional $25 million payments would be due April 30 and July 31.

      R.E. Loans — which, like other hard-money lenders, made short-term, or bridge, loans at high interest rates — said its loans totaled $637 million as of the petition date, including real estate on which it has foreclosed. Its cash flow comprises proceeds from selling off those assets.

      The committee said in court papers that the timetable is “not merely aggressive — it is unachievable.”

      The creditors’ committee also objected to what it termed an “impermissible” roll-up of Wells Fargo’s debt.

      In court papers, the committee asserted Wells Fargo has effectively reduced the “new money” component of the DIP loan to zero while simultaneously requiring the debtor to repay its prepetition debt to the lender at a faster rate than the rate of borrowing under the DIP loan.

      The committee said in court papers that in the first four months of the case, the true cost of about $6.7 million in rolled up prepetition debt would be the paydown of $16.9 million of prepetition lender debt.

      As part of the DIP agreement, R.E. Loans has agreed to turn over all its cash collateral through Jan. 31, 2012, to Wells Fargo, court papers show. The DIP has an initial term of six months, but Wells Fargo has agreed to extend the terms of its financing through Dec. 31, if an agreed-upon reorganization plan is confirmed to give the debtors additional time to pay off the debt.

      The DIP will accrue interest at an annual rate of LIBOR plus 1,400 basis points, court documents said. Wells Fargo originally provided R.E. Loans with a working capital line of credit in 2007, and as of the petition date, is due about $68 million, court papers said.

      The Lafayette, Calif., debtor provides loans to real estate developers. R.E. Loans filed for Chapter 11 protection on Sept. 13 because of defaults by nearly all its borrowers, as well as the general economic downturn.

      In its petition, R.E. Loans reported assets and liabilities of $100 million to $500 million.

      Read more: http://pipeline.thedeal.com/31/10005639035/8956015.t?d=2#ixzz1d8A3vtaz

  6. “R.E. Loans filed for Chapter 11 protection on Sept. 13 because of defaults by nearly all its borrowers, as well as the general economic downturn. ”

    They left out that part where RE Loans distributed millions to their friends and family, draining the accounts. Here’s the writer’s contact info if anyone feels compelled to fill in the blanks for her:
    http://www.thedeal.com/content/Kelsey_Butler

    • Kmum: Don’t overlook the fact that those borrowers and the properties on which loans were made by RE Loans, LLC were ALL selected by Barney Ng and the loan terms were negotiated by Barney Ng. Remember Barney Ng told everyone in his December 9 letter (date may be wrong) that he conceived of a “new type of loan” and that loans were made only on “best of breed” properties. Now I wonder how did Barney Ng expect unimproved, ‘negative carry’ properties (most of which were located outside the State of California in violation of the initial RE Loans LLC Offering Circular)to generate the income required to pay RE Loans LLC Unit Holders now Note Holders? Probably one reason why Barney Ng, his daughter and son in law were the members of the Ng family who negotiated the infamous Line of Credit with Wells Fargo Foothill. Now why do you suppose Mr. Brower convinced counsel in the Class Action lawsuit (not the Mendes one – yet) to delete Barney Ng as a named defendant? So many questions and so few answers viz the ‘evaporation’ of Barney Ng from this fiasco. Mr. Brower could probably clarify all this for us – but will he tell us why/how he convinced Phoenix counsel in the first class action to delete Barney Ng as a defendant when it is SO CLEAR that Barney Ng was definitely involved in this fiasco up to his eyebrows and made (and so far has retained) the millions of dollars he made in loan fees on those “best of breed” loans. We can only hope that Barney Ng remains a named defendant in the Mendes class action and that Mr. Brower keeps his hands off that lawsuit. Let’s hope he doesn’t do the same in the Mendes class action – for which lawsuit we are all grateful – or at least we should be.

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