Receivership

SEC vs. Private Equity Management Group

SEC vs. Private Equity Management Group
Federal Court Receiver

Situation:

  • Alleged Ponzi scheme
  • New dollars pay off maturing investors and fund ongoing operations
  • Eight institutional investors defrauded
  • $1 billion investment

Goals:

  • Maximize recovery for investors/creditors
  • Sell 50+ assets worldwide
  • Coal mines in China; 880 acres in Costa Rica; Timeshare project in Canada; oil and gas rights in Russia; real properties and notes in US
  • Maximize the value of 275 life policies
  • Pursue litigation

Results:

  • To date $135 million of assets sold
  • 237 life policies transferred to investors with a potential future value of $275 – $335 million
  • Litigation is ongoing
  • Potential recovery: in excess of 40%


Mosier & Company, Inc.

SEC vs. National Financial Systems, Inc.

SEC vs. National Financial Systems, Inc.
Federal Court Receiver

Situation:

  • Alleged Ponzi scheme
  • 100 investors defrauded
  • Mostly pension plans for small companies
  • A high-yield cash fund: insufficient to repay investors; new dollars used to pay off early investors and support operations

Goals:

  • Maximize recovery for investors
  • Sell notes receivable and real estate
  • Sell untainted pension administration division
  • Pursue litigation

Results:

  • Pension administration business sold preserving legal status for dozens of retirement plans
  • Recommend LIFO method of distribution due to poor
  • books and records
  • 42.5% recovery for the investors
  • Two year administration


Mosier & Company, Inc.

IRS vs. A.L. Hargis

IRS vs. A.L. Hargis
Federal Court Receiver

Situation:

  • Warehouse banking operation where individuals seek to avoid paying income taxes
  • All records destroyed prior to appointment
  • Over 800 participants in the program

Goals:

  • Recover records
  • Recover and sell assets
  • Pay IRS liens and penalties
  • Reconcile participant accounts

Results:

  • Warehouse banking operation shut down
  • Letter provided by a participant leads to recovery of several assets
  • List of participants found
  • Participants advised: change in tax status with potential, retroactive tax liability dating back several years


Mosier & Company, Inc.

CSA

CSA
State Court Receiver and Provisional Director

Situation:

  • Dispute between two owners
  • Specialty consulting business
  • Claims and counter claims of abuse and misuse
  • Lawsuits pending: request for dissolution
  • 70 consultants caught in the struggle

Goals:

  • Separate the two owners
  • Divide the business
  • Arrive at a buyout number for the owner who purchased the main business assets and attributes (location, telephone number, name, web site, etc)

Results:

  • Negotiations: settlement reached in 3 months
  • Buyout consisted of cash and note
  • One party started a new, competing company
  • Consultants choose which entity
  • Receiver converted to Provisional Director
  • Oversee implementation of settlement


Mosier & Company, Inc.

W-23 Lofts

W-23 Lofts
State Court Receiver

Situation:

  • West Hollywood lofts condo project; 12 units
  • 80% completion; stalled, over budget
  • The bank: $9.5 million in the project
  • The cost to complete: another $2 mil/6 months
  • Condo financing required 50% of units to be sold before any financed unit could be closed

Goals:

  • Get owner cooperation: release guarantees
  • Select a general contractor and sales team
  • Complete construction and then sell the units
  • Obtain all necessary approvals including HOA
  • Price the units to sell but maximize the recovery for the lender

Results:

  • Construction completed on time (6 months) and on budget ($2 million)
  • All documents and approvals obtained
  • Initial lackluster broker changed
  • Project sold out in twelve months
  • Lender recovered 66% of its loan amount


Mosier & Company, Inc.

Bellagio of Palmdale

Bellagio of Palmdale
State Court Receiver

Situation:

  • 12 of 24 units incomplete at 75%
  • The cost to complete: $1.3 million and 6 months
  • Owners cooperative with release of guarantees
  • High desert pricing declined significantly (>50%)

Goals:

  • Select a general contractor and sales team
  • Complete construction and then sell the units
  • Price the units to sell but maximize the recovery for the lender

Results:

  • Construction: on time and on budget
  • Sales lagged expectations
  • Several price reductions
  • Total lapse time: greater than 12 months
  • Lender: recovered $2.7 million plus raw land


Mosier & Company, Inc.

Apartments West of Downtown LA

Apartments West of Downtown LA
State Court Receiver

Situation:

  • Older 12-unit apartment complex
  • Significant deferred maintenance
  • Difficult neighborhood: drugs, prostitution, gangs
  • Default by borrower
  • Several Vacancies

Goals:

  • Retain on-site Latino-speaking managers
  • Lease out the project and improve security
  • Offer competitive move in specials
  • Resolve City code violations
  • Perform selective maintenance and repair
  • Upgrade rents in improved units

Results:

  • All units leased: move-outs replaced timely
  • Install security cameras, lights and new rules
  • Improve grounds and physical appearance
  • Continuous graffiti removal
  • Selectively improved units with move-outs
  • Coordinated a short-sale to get lender paid


Mosier & Company, Inc.

Historic Office Building San Francisco

Historic Office Building San Francisco
Federal Court Receiver

Situation:

  • Owner/manager in default on loan
  • Focus: immediate cash vs. long-term stability
  • 30% vacancy and below market lease rates
  • Deferred maintenance throughout
  • Two of five elevators inoperable
  • City mandated repairs/upgrades
  • Keen interest in the property: age & location

Goals:

  • Replace management and stabilize the project
  • Improved lease rates and occupancy
  • Address City code deficiencies
  • Upgrade rents in improved units as appropriate
  • Sell the building at the best price
  • Cap rate: $17 million value vs. $41 million loan

Results:

  • New on-site management
  • Renovation experience
  • Occupancy improved to 80%
  • Lease rates returning to market
  • National credit-worthy tenant selected for retail space suggesting an improved cap rate
  • Technical problems resolved (elevators)
  • Replaced boilers with city-provided steam
  • Project sold for $35 million; 50% down and an owner-carry note


Mosier & Company, Inc.

Strip Mall West of Downtown LA

Strip Mall West of Downtown LA
State Court Receiver

Situation:

  • Default on underlying mortgage
  • Owner occupied 30% of the center
  • Owner cut favorable deals with several tenants
  • Deferred maintenance throughout
  • Tenant unrest and revolt
  • Some had stopped paying rent

Goals:

  • Replace management and stabilize the project
  • Improved lease rates and occupancy
  • Upgrade rents in improved units as appropriate
  • Stop the owner from interfering in the management of the property

Results:

  • Locks changed on owner units
  • Tenants resumed paying rent
  • Owner contained and interference limited
  • Project stabilized to facilitate foreclosure
  • Foreclosure completed


Mosier & Company, Inc.

686 Acres: 1,700 Residential Home Sights, Two Golf Courses Antioch, California

686 Acres: 1,700 Residential Home Sights, Two Golf Courses Antioch, California
State Court Receiver

Situation:

  • Stalled in the entitlement process
  • Equity in the property
  • Delinquent property taxes
  • Property below the Delta flood level
  • Requirement: a 20-foot high circumference moat
  • Moat requirements: dewater the earth below
  • Dewater options: deep dynamic compaction or over-easy excavation
  • Large upside but huge infrastructure expense

Goals:

  • Maximize recovery: 832 investors; $15.6million
  • Conventional sales due to complexities of sale
  • Work with the buyer to achieve a final map
  • Deep dynamic compaction (DDC) to dewater
  • Less costly than over-easy excavation option

Results:

  • Sold project to Shea Homes
  • $5.6 million (30% recovery)
  • Sale contingent upon obtaining a final map
  • Receiver/Shea got County Planning approvals
  • Neighbors sold on DDC in exchange for a riding trail atop the maot


Mosier & Company, Inc.

1,300 Acre Ahwahnee Golf Course Plus 58 Home-Sites Oakhurst, California

1, 300 Acre Ahwahnee Golf Course Plus 58 Home-Sites Oakhurst, California
State Court Receiver

Situation:

  • Golf course underutilized: narrow fairways and incomplete infrastructure
  • Public drive thru traffic created vandalism
  • Home site development stalled: lack of funds

Goals:

  • Maximize recovery for the 3,018 investors
  • Pursue conventional sales method
  • Complete course infrastructure (cart paths/sprinklers): enhance value
  • Widen selected fairways by tree thinning
  • Extend cart paths throughout
  • Stabilize revenues: course improvements
  • Limit vandalism: increased patrols and cameras

Results:

  • Property sold to developer for $4.3 million
  • Progress toward improving golf course
  • Entitlements on home sites preserved


Mosier & Company, Inc.

Roofing Company Plus Large Home and Extravagant Assets Seized in Court-Authorized Raid

Roofing Company Plus Large Home and Extravagant Assets Seized in Court-Authorized Raid
Criminal Receivership

Situation:

  • Roofing contractor accused
  • $45 Million: Worker Compensation fraud
  • Raid on residences and business
  • Arrests and secure assets
  • Determine business viability: owner absent
  • Restitution claims: State; IRS payroll taxes due

Goals:

  • Value all assets
  • Secure and store all non-depreciating assets
  • Complete roofing jobs were possible
  • Collect accounts receivable without warranties

Results:

  • Business seized and eventually wound down
  • A/R collected, some involving litigation
  • Personal assets held pending sentencing
  • Case is on-going


Mosier & Company, Inc.

Judgment Against Defendant Alleged Off-Shore Assets

Judgment Against Defendant Alleged Off-Shore Assets
State Court Receiver

Situation:

  • Judgment: investor in alleged fraudulent scheme
  • Receiver: aid in execution of the judgment
  • Corporations Commission: requested Receiver
  • Which Receiver had priority over assets?
  • Alleged offshore assets

Goals:

  • Prioritize the Receiver for judgment creditor
  • Trace and locate assets
  • Liquidate known assets
  • Make recommendations to the Court

Results:

  • Business seized and eventually wound down
  • A/R collected, assets sold
  • Challenge by competing receiver defeated
  • Off-shore asset tracing unsuccessful
  • Business owner sentenced to prison in Utah


Mosier & Company, Inc.

Reynolds Building

Reynolds Building
Receiver in Family Court Sale of Real Property

Receiver in Family Court Sale of Real Property

Situation:

  • Disputes errupt in 10 year-old divorce
  • Former spouses: no agreements
  • Court orders rental building sold

Goals:

  • Stabilize tenant relations
  • Address deferred maintenance
  • Maximize value through auction sale

Results:

  • Tenant issues resolved/stabilized
  • Deferred maintenance addressed
  • Property auctions for $4.3 million
  • Exceed market comps by $1 million


Mosier & Company, Inc.

Fertility Clinic

Fertility Clinic
Receiver Medical Practice

Situation:

  • 2 doctors cannot agree on spliting profits
  • Disputes over operation of laboratory
  • Dispute threatens profitability

Goals:

  • Stabilize the current operations
  • Equitably divide the practice
  • Ensure medical procedures compliance

Results:

  • Laboratory and practice stabilized
  • Practice divided
  • Patient records transferred
  • Dispute resolved


Mosier & Company, Inc.

(Ownership Dispute/Litigation)

Court-Appointed Provisional Director (Ownership Dispute/Litigation) $11,000,000 Scrap Metal Processor/Dealer Situation: This company generated an impressive volume but lost money because of poor controls. The business defaulted on a $1.2 million secured loan. A secured lender sought the appointment of a Receiver to see if the business could be salvaged. Robert P. Mosier was appointed Receiver. Results: Controls were put in place and the business’ cash flow was stabilized. An investor purchased 49% of the stock with an infusion of cash that (1) paid off the secured debt and (2) preserved tax NOL. Duration: 6 months. Orange County Superior Court Judge Robert J. Polis. James McShane, Esq., Sheppard, Mullin, Richter & Hampton, Counsel for Plaintiff; Gary Torpey, Esq., Counsel for Defendant. Project Coordinator: Craig M. Collins

“Our client was hoping for a solution that would avoid shutting down the company and liquidating the inventory. Mosier & Company gained the confidence of both the lender and the owner as it worked through the solution that got our client paid.”

James McShane, Esquire Sheppard, Mullin, Richter & Hampton Counsel for Plaintiff Receiver: Corporate Dissolution

(Dissolution/Refinance)

Court-Appointed Receiver (Dissolution/Refinance) $35,000,000 Wheel Rim Manufacturer and Importer Situation: The company defaulted on a $11.0 million secured line of credit. The relationship was contentious: the borrower had previously brought an unsuccessful lender liability action. Robert P. Mosier was appointed Receiver pursuant to the default provisions of a Chapter 11 Plan. Results: The Receiver sold unneeded inventory and equipment to pay down the loan. The balance of the note was paid by refinancing other properties owned by the Defendant/Debtor. Duration: 2 years. Los Angeles Superior Court Judge. Diane Wayne. Clifford Meyer, Esq., of Buchalter, Nemer, Fields & Younger, Counsel for the Bank, Edythe Bronston, Esq., Counsel for the Receiver.

“This was a difficult case with a history of hot tempers, allegations and even threats. Mosier stuck to the agenda through two years of legal maneuvering and ultimately achieved success.”

Edythe Bronston, Esquire Counsel for the Receiver

(Dissolution through Mediation)

Court-Appointed Receiver (Dissolution through Mediation) $9,000,000 Engineering Firm (Major Public Works) Situation: The firm was forced to close its doors because of contract disputes on major projects. The firm was current on its $600,000 secured line of credit. Robert P. Mosier was appointed Receiver. Results: Maximized the value of the firm’s FF&E. Collected accounts receivable. Oversaw and settled litigation against several companies that contributed to the firm’s closure. A 99% recovery for the secured creditor, and a release of personal guarantees for the principals. Duration: 2 yrs. Orange County Superior Court Judge Dennis Choate; Camilla Andrews, Esq., of Ivanjack & Lambirth for Secured Lender. Leonard Schulman, Esq., of Marshack & Schulman for the Company.

“By opting for a Dissolution Receiver (vs. Chapter 7), the Bank was able to (1) recommend Mosier and (2) remain a party to the process along with the owners. Mosier & Company manages the wind-down very successfully including facilitating resolution of a major lawsuit through mediation.”

Jim Barks Then Vice President Special Assets Sunwest Bank Receiver & Examiner: Settlement

(Taking Control and Settlement)

Court-Appointed Receiver (Family Court) (Taking Control and Settlement) $27,000,000 Pacific Rim Cable Importing Business Situation: A family-owned business (successfully run by one spouse) was caught up in a divorce. When the other spouse attempted to reassert control, the business declined rapidly. Robert P. Mosier was appointed Receiver. Results: The Receiver selected one spouse to run the business; the other served on the Board with the Receiver. Settlement was achieved by splitting the business: a consumer division to one spouse and the OEM division to the other. Duration: 6 months. Superior Court Commissioner Sheila Fell; Bruce Hughes, Esq. of Hughes & Hughes and Mark S. Lam, Esq. for the Petitioner; Bertrend Cottle, Esq. for the Respondent. Project Coordinator: Craig M. Collins

“The case involved a Taiwanese couple. The language and cultural barriers made it more challenging. Once Mosier took control of the business, and worked with one party without excluding the other, the matter proceeded to settle in a matter of weeks.”

Bruce Hughes, Esquire Hughes & Sullivan Counsel for the Petitioner