The owner of a financial services business, plagued by unpaid creditors and lawsuits relating to years of unpaid loans, has filed for Chapter 7 bankruptcy protection, as reported by The Tribune News.
A.M., of Grover Beach, filed bankruptcy amidst claims of fraud, elder abuse and breach of contract. His company, under his namesake, owes over $22 million to its creditors. Several San Luis Obispo County private residents, that loaned money to A.M. in personal loans, are included in the $22 million debt.
The bankruptcy was filed on December 31 in the Western District of Washington's U.S. Bankruptcy Court.
The San Luis Obispo Superior Court has had 19 separate lawsuits pending against A.M. – all for non-payment of promissory notes. It is also claimed that A.M. failed to acquire the security licenses that are necessary to make investments.
Due to the bankruptcy filing, all of the lawsuits are being stayed. It is now in the hands of the Bankruptcy Court to determine assets and liabilities, and then make the necessary distributions.
Assets for A.M.'s company are listed as over $3.7 million. The money is accounted for in real estate in the South County and Washington state. A.M. has a home in Bremerton, Wash., that he is hoping to retain, as well as $1,500 in jewelry and three vehicles valued at $21,000.
Property that A.M. is offering for liquidation to satisfy his debts are: two condominiums, two properties in Grover beach, a million-dollar home in Nipomo and additional land in Nipomo.
Kirby Gordon, A.M.'s attorney, tried to avoid the bankruptcy filing by first attempting to consolidate all of the civil lawsuits in San Luis Obispo Superior Court, hoping to make a settlement.
Gordon said, "We honestly tried to work out some kind of global settlement with everyone who had filed. That was truly our intent, or we would have gone to bankruptcy back in April when the first case was filed."
Creditors waiting to be paid are owed a range of funds between $25,000 and $500,000. It is not yet known how much each will be able to receive in the bankruptcy distribution.
The Bankruptcy Court has assigned bankruptcy trustee Michael Klein, of Bainbridge Island, Wash., the case. Klein was unreachable by reporters seeking his comment.
San Jose attorney David Kraft, who filed the first lawsuit against A.M. on behalf of client F.C., was due to have his case heard by a judge this month. In that case A.M. allegedly failed to meet his financial commitment of $5,393 a month in a loan repayment. The loan was made in 2010 for over $200,000 and as of January 2012 A.M.'s payments had completely ceased.
With the chance of getting his client's money back narrowing further, Kraft said, "Now we have to start over in bankruptcy court."
Contact a bankruptcy attorney to file a business or personal bankruptcy. Filing for bankruptcy can help to control mounting debts, and help to reduce your stress.