Milken Fund Pays Southmark Settlement

Southmark Corp. has received an initial payment of $26.5 million from a settlement fund of onetime junk bond king Michael Milken.

The payment from the Milken Global Settlement Fund goes to settle claims Southmark filed against Milken and some affiliates. Southmark said in November that its claim against Milken had been evaluated at $287.5 million, of which it expected to collect $30 million or less.

The company said any future distributions from the Milken fund would require further court approval.

Dallas-based Southmark, once an $8 billion real estate conglomerate built with the high-yield debt securities Milken pioneered at Drexel Burnham Lambert in the 1980s, filed for bankruptcy court protection in July 1989 and is now in liquidation.

Southmark became the nation’s largest publicly traded real estate company by buying and selling partnerships. Much of its growth was financed with $2 billion in junk bonds.

Southmark sued Milken for more than $200 million and later calculated the damages at more than $1 billion.