Met selling properties to repay investors
Thu., June 10, 2004
Metropolitan Mortgage & Securities Inc. is selling all of its properties to repay investors as executives wind down the company’s 50-year business run in Spokane.
The sales include everything from Metropolitan’s 17-story headquarters in downtown Spokane to ocean-front lots in Hawaii.
Bill Romney, chief restructuring officer at Metropolitan, will file a plan by Aug. 30 spelling out the future of the company.
In all likelihood, Metropolitan and Summit Securities Inc., its Idaho sister company, will cease all but the most basic bookkeeping operations by Nov. 1, Romney said.
Investors hoping to recover at least a portion of their money will likely be organized into various “creditors’ trusts,” he said. These will be tightly controlled organizations designed to collect money and distribute it to creditors approved in Metropolitan’s bankruptcy.
The trusts will parcel out money, for example, that may be recovered by asset sales, lawsuits against former executives and board members, and perhaps money won from suits against its former accounting firms, Ernst & Young LLP and PriceWaterhouseCoopers LLP. Another possible asset would be the return of Metropolitan’s former insurance subsidiaries, now controlled by insurance commissioners in three states.
According to Romney, Metropolitan properties for sale include:
“ The Metropolitan Financial Center, for $16.5 million.
“ The Summit property on the north bank of the Spokane River near downtown, for $12.5 million.
“ The Metropolitan Performing Arts Theater, for about $800,000.
“ Beachfront lots within Metropolitan’s Dillingham Ranch property on the island of Oahu, for about $35 million.
Davenport Hotel owner Walt Worthy, who has tried to buy Met’s headquarters building, said Wednesday that he has acquired an $11 million note collateralized by the high-rise. He bought the note from IDS Life Insurance Co.
“I own the note. Instead of owing IDS, (Metropolitan) owes me,” Worthy said. “Now I’m going to try to make a deal with them to buy the building.”
Though Worthy wouldn’t say how much he paid, courthouse records show he recently borrowed $11.25 million from US Bank. He listed his Davenport Hotel and its adjacent parking garage as additional collateral. Worthy said the hotel isn’t at risk.
The hotelier and developer said he hopes to take ownSership of the office building and plans to fix it up and lease the space.
Romney said there’s been plenty of interest in the various properties.
Next week the company hopes to sell the Met Theater to well-known local car auctioneer Mitch Silver for about $800,000. The sale would close after a public auction, Romney said.
Romney said Metropolitan will not sell properties for less than fair market value.
“There won’t be a fire sale,” he said. “We’re committed to getting the best value.”
Overall, Metropolitan’s financial collapse affects tens of thousands of mostly Northwest investors who hold more than a half-billion dollars in debts.
Doug Siddoway, an attorney representing creditors in the bankruptcy case, said lawsuits against accounting firms and executives may offer investors the best chance at a substantial recovery.
Metropolitan has about 40 employees, down from more than 600 several years ago.
A scathing report issued Tuesday blamed the company’s collapse on former owner C. Paul Sandifur Jr.
Court-appointed examiner Samuel Maizel said the company was driven to financial ruin by Sandifur and his executive team’s disastrous foray into commercial lending.
Ill-informed investors thought buying Metropolitan bonds was safe when in fact the company’s financial statements – audited by PriceWaterhouseCoopers and Ernst & Young – were inaccurate.
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