TOUSA, Inc. and affiliates
At the time of a chapter 11 filing in 2008, Tousa, Inc. was one of the largest publicly traded national homebuilders in the United States. It operated under various trade names, including Engle Homes, Newmark Homes, Trophy Homes and others and had 1700 employees until the chapter 11 filing of TOUSA, Inc. and its 38 affiliates in 2008. Various approaches were explored and attempted by the Debtors to maximizing the results of the restructuring effort. However, ultimately, the determination was made to engage in an orderly liquidation of the homebuilding and related assets. In addition, the Debtors and the Official Committee of Unsecured Creditors brought significant litigation claims to recover certain pre-bankruptcy transfers and/or to realize on claims against former officers and directors.
By 2013, this effort resulted in the completion of the disposition of the principal homebuilding assets and the recovery of judgments and/or settlements in the hundreds of millions of dollars. However, a relatively small portion of the homebuilding assets remained to be administered and liquidated. Substantial litigation claims remained unadjudicated. In addition, a judgment with remaining damages of over $250 million was being appealed by the defendants in the case. Finally, substantial numbers and amounts of claims against the Debtors remained to be adjudicated.
In order to continue and ultimately complete the administration and disposition of these assets and litigation claims and to complete the adjudication of claims against the Debtors, the TOUSA Debtors confirmed a Chapter 11 Plan which provided for the creation of the TOUSA Liquidation Trust. The Trust would undertake the disposition of the remaining assets, litigation of the remaining claims, adjudication of the remaining claims against the Debtors and make distribution to creditors of proceeds on hand and proceeds recovered in the future. Mr. Beck's firm, J Beck & Associates, Inc. was appointed Trustee of the TOUSA Liquidation Trust.
In this capacity, Mr. Beck's firm as Trustee has distributed approximately $340 million in the first distribution to creditors. The Trustee has also vigorously continued the prosecution or settlement of the litigation claims and the defense of the judgment on appeal. In addition, the Trustee has disposed of and wound up the remaining homebuilding and related assets and businesses. Finally, the Trustee has vigorously prosecuted objections to and settlements of the claims asserted against the Debtors.
INDYMAC BANCORP, INC.
IndyMac Bancorp, Inc. was the holding company for IndyMac Bank. IndyMac Bank failed in July 2008 with stated assets of $32B, making it one of the largest bank failures in US History. Mr. Beck was appointed in October 2008 by Alfred H. Siegel, Chapter 7 Trustee of IndyMac Bancorp, Inc. to serve as Advisor to the Trustee on matters relating to the administration of bankruptcy and other insolvency proceedings involving financial institutions.
TRANSCAPITAL FINANCIAL CORPORATION AND AMERICA CAPITAL CORPORATION (F/K/A AMERICAN CAPITAL CORPORATION)
In April 2008, pursuant to a settlement agreement among the debtors and the principal creditors, Mr. Beck was appointed Claims Examiner and is designated to be the post confirmation Liquidating Agent for Transcapital Financial Corporation and America Capital Corporation, debtors in the United States Bankruptcy Court for the Southern District of Florida. Transcapital was a publicly traded company which was the holding company of Transohio Savings Bank, FSB, at one time, the largest thrift in Ohio. America Capital, a publicly traded company, in addition to other interests, owned approximately 65% of Transcapital. The cases focus on the claims and interests asserted by various parties to the approximate $33 million proceeds of litigation by the debtors against the government over an assistance agreement entered into at the time of acquisition of several failed Ohio thrifts which were merged into Transohio. Upon the confirmation of the debtors chapter 11 plans, Mr. Beck was appointed Liquidating Agent to assume control over the debtors and the determination of claims and prosecution of any causes of action to which the debtors remain entitled. This process was completed and the cases closed in 2013.
SOUTHEAST BANKING CORPORATION AND SOUTHEAST BANK, N.A. (website significant settlement and ongoing matters: www.sebcglobalsettlement.com)
In April 1998, upon the recommendation of creditors, Mr. Beck was appointed by the United States Bankruptcy Court for the Southern District of Florida as Chapter 7 Trustee of Southeast Banking Corporation (formerly a NYSE listed company) as successor to a previous trustee who had resigned. The assets in the bankruptcy estate at the time of Mr. Beck’s appointment consisted of cash, significant real property development sites in Jacksonville, Florida, other real estate, holdings in shares of other companies, an over-funded pension plan and four lawsuits initiated in the U.S. District Court for the Southern District of Florida against the company’s former officers and directors, attorneys, investment bankers and accountants. At the time of Mr. Beck’s appointment, these lawsuits had been dismissed and appeals of such dismissals had been initiated to the U.S. Circuit Court of Appeals for the 11th Circuit.
Mr. Beck engaged a litigation team of attorneys and experts and was successful in obtaining the reversal of the dismissals of the suits against the company’s former accountants, attorneys and directors and officers. After extensive trial preparations and on the eve of trial, the three defendants and the litigation counsel for the previous trustee agreed to a combination of cash payments of $40 million and claims reductions of approximately $12 million. In addition Mr. Beck successfully negotiated a settlement of a remaining $26 million claim of the FDIC for a reduced amount of approximately $5.5 million.
After completing these settlements, Mr. Beck has completed distributions of approximately $260 million, which, together with distributions of prior trustees, amounted to payment in full of the principal amount of timely filed claims and a distribution of post-petition interest of over $50 million.
Remaining assets of Southeast included cash reserves and real property holdings in subsidiaries of the Debtor. One of these properties consists of a 200 acre undeveloped parcel in Jacksonville, Florida impacted by access limitations, wetlands and lack of zoning and land use entitlements. Mr. Beck engaged consultants and attorneys to address the concerns. An inverse condemnation action was initiated against the Jacksonville Transportation Authority regarding access rights. This matter was settled with a $2.25 million cash payment from the Authority and its commitment to construct a $7-10 million access road to serve the property. This roadway was completed in 2005. Mr. Beck directed the marketing and sale for a portion of this property which was consummated in 2005 for in excess of $13 million. By the end of 2007, Mr. Beck had directed to a successful conclusion a team of managers, engineers and counsel to accomplish planning, engineering and wetlands permitting activities on the remaining properties in order to proceed with its continued development and ultimate sale.
In late 2007, Mr. Beck announced the execution of a definitive agreement with an investor entity (which was a subsidiary of Merrill Lynch) for the investment by that entity of $1.5 billion for the reorganization and recapitalization of Southeast Banking Corporation. This transaction contemplated the retention of the undeveloped real properties. The case was converted to a chapter 11, Mr. Beck was appointed as Chapter 11 Trustee and a reorganization plan was confirmed to consummate the transaction. Unfortunately, the global financial meltdown resulted in the investor entity terminating the transaction.
As a result, the case was reconverted to Chapter 7 and Mr. Beck was reappointed Chapter 7 Trustee. In the ensuing years, Mr. Beck has negotiated the sale and closing of additional parcels with such land sales totaling over $17 million. The aggregate realization from the sales of this undeveloped land now exceeds $30 million.
In addition to his service as Trustee of Southeast, he has been designated as Successor Agent to the Federal Deposit Insurance Corporation as Receiver of Southeast Bank, N.A. In this capacity, he has administered the remaining assets and claims in this formerly $10 billion bank’s receivership, including a distribution of over $100 million to himself as Trustee of Southeast Banking Corporation, and tens of millions of dollars in other claims and assets.
CONTIFINANCIAL CORPORATION (website for trust: www.cfntrust.com)
In April 2001, Mr. Beck was selected by the creditors to become trustee of the ContiFinancial Corporation Liquidating Trust formed pursuant to the confirmed Chapter 11 Plan of the company and its affiliates (U.S. Bankruptcy Court for the Southern District of New York). The company was formerly a NYSE listed company engaged nationally in the sub-prime lending area. The company had securitized over $12 billion of loans prior to its Chapter 11 filing in May of 2000.
The trust assets consisted of the company’s residual interests and rights to servicing income in the securitized loans, cash and claims against third parties arising from the demise of the company. At the outset of the assignment, the company had dozens of offices around the country and hundreds of employees. Mr. Beck has managed the employees and administered those assets and their liquidation. The offices have been efficiently closed, records and systems preserved and the employees gradually eliminated. A settlement was in process at the inception of the trust of claims against the directors and officers and former parent company in the amount of $33 million. This settlement was consummated shortly after the trust became effective.
Avoidance actions and a litigation claim against the company’s former auditor have been commenced and concluded. The residual assets were managed and gradually liquidated. Objections to remaining unresolved claims were completed. As a result of direction by Mr. Beck of his team of accountants, attorneys and consultants, the management and marketing of remaining assets yielded approximately $200 million in proceeds. By the conclusion of the case, sums administered by Mr. Beck exceeded $320 million and distributions to the trust beneficiaries totaled approximately $285 million.
SOUTHERN PACIFIC FUNDING CORPORATION (website for trust: www.sp-funding.com)
In July 1999, Mr. Beck was selected by the creditors to become trustee of the Southern Pacific Funding Corporation Liquidating Trust formed pursuant to the company’s confirmed Chapter 11 Plan (U.S. Bankruptcy Court for the District of Oregon). This company was formerly a NYSE listed company engaged in the sub-prime lending arena. The company had securitized over $2 billion of sub-prime loans prior to its Chapter 11 filing in October of 1998. In conjunction with the consummation of the Plan, Mr. Beck participated in the closing of an approximate $38.5 million transaction with Goldman Sachs negotiated by the debtor and creditor’s committee pursuant to which the trust retains a 50% interest in the net cash flow from residual interests sold to Goldman affiliates. As of December 2005, distributions to trust beneficiaries totaled approximately $57 million.
Four litigation claims were asserted against the company’s former officers and directors, auditors/accountants, investment banker and one of its mortgage servicers. In addition, a number of avoidance claims were filed. All of these claims have been resolved by settlement for aggregate settlements of over $16 million. Objections to claims have been prosecuted and completed as well.
At the time of confirmation of the Southern Pacific Chapter 11 Plan, the debtor’s assets included a 25% minority share interest in and a $10 million promissory note claim against the company’s formerly wholly owned United Kingdom subsidiary, Southern Pacific Mortgage Limited. This subsidiary had ceased operations at the time of Mr. Beck’s appointment. Mr. Beck and that company’s management successfully restructured the company and negotiated an investment of several hundred million dollars by Lehman Brothers, which obtained a majority interest in the company, with the SPFC Liquidating Trust retaining its promissory note and a 15% interest in the UK company. Thereafter Mr. Beck was designated a “Board Observer” of the Southern Pacific Mortgage Limited board of directors. Mr. Beck continued to participate in the management of the UK company and managed this investment until he negotiated the sale of the note and share interest to Lehman in 2002 for a realization of over $17.5 million.
The remaining interest in the cash flow rights from Goldman Sachs was successfully sold to Goldman Sachs in 2003 for approximately $20 million. The remaining asset consists of a claim in the Reliance Group insolvency proceeding. Reliance was the insurance carrier of director and officer coverage. The claim emanated from a settlement of litigation against the officers and directors. Mr. Beck successfully sold that claim in 2007 and made a final distribution of the proceeds in 2009.
BANCO LATINO INTERNATIONAL
In May 1994, Mr. Beck was appointed by the United States Bankruptcy Court for the Southern District of Florida as Chapter 11 Trustee of Banco Latino International. This was the first known Chapter 11 filing for a banking institution (as distinct from holding company) in the United States with deposits and other obligations of over $200 million. Within several months, Mr. Beck and his staff made substantial progress in collections of the bank’s $100 million loan and credit portfolio. Utilizing a $20 million support agreement he negotiated with the parent Venezuelan government-controlled Bank, Mr. Beck successfully reorganized and reopened Banco Latino International in December, 1994 after approval from the appropriate government authorities in Venezuela, the United States Bankruptcy Court for the Southern District of Florida and the Board of Governors of the Federal Reserve System of the United States.
The depositors and other creditors of Banco Latino received over $175 million, representing payment of their claims in full including post-bankruptcy interest. This unusual transaction was accomplished within 6 months of Mr. Beck’s appointment. It appears to be the first such case of its kind where a banking institution which had been closed (in this case for the five months before his appointment and the six months following) was successfully reopened. Because of the efforts of Mr. Beck and his staff, the institution retained approximately 50 percent of its deposit relationships until the parent, which had regained control pursuant to the plan, determined to successfully sell the deposits to SunTrust Bank, yielding over $20 million for the reorganized Debtor’s shareholders.
CROWN VANTAGE, INC. (website for trust: www.crownpapertrust.com)
In March 2002, Mr. Beck was selected by the creditors to become trustee of the Crown Paper Liquidating Trust formed pursuant to the confirmed Chapter 11 Plan of the company and its subsidiary, Crown Paper Company (U.S. Bankruptcy Court for the Northern District of California). The company was formerly a NASDAQ OTC listed company and was a major producer of paper products in the printing and specialty market segments. According to the company’s disclosure statement, net sales in 1999 amounted to $740 million and consolidated liabilities amounted to approximately $800 million.
Trust assets consist of a small number of tangible assets, mineral rights on a 4000 acre island in the Mississippi River in Louisiana and significant litigation claims, including avoidance actions and claims relating to the creation of the company as a separate public company and its subsequent operations. Several hundred avoidance actions were filed in March 2002 and have been concluded with settlements aggregating approximately $10 million. Actions relating to the creation and operations of the company that were in process as of March 2002 and others commenced since have been vigorously prosecuted. These actions were filed against the company which spun off Crown as a separate public entity, two audit/accounting firms, directors, advisors and investment bankers. A settlement has been negotiated and concluded by Mr. Beck in the amount of $55 million.
Mr. Beck successfully marketed, negotiated and consummated a lease for a substantial portion of the mineral rights in Louisiana. The drilling and exploration was successful and lease payments and royalties exceeded $2.5 million.
At the time of Mr. Beck’s appointment, the companies’ principal labor union had successfully sued the companies to challenge their decision to terminate and annuitize certain overfunded retirement plans. That action would have made several million dollars of overfunding available to creditors of the company, while fully funding obligations to retirement plan participants. At the suit of the union, asserting that the companies had failed to properly consider their demand that the retirement plans in question be merged into the union’s multi-employer retirement plan, the Bankruptcy Court had ruled that the companies had breached their fiduciary duty and that the overfunding would be denied the creditors and instead be redistributed to the retirement plan participants.
Mr. Beck appealed the decision to the United States District Court for the Northern District of California and to the United States Court of Appeals for the Ninth Circuit. Both courts denied Mr. Beck’s appeal and affirmed the decision of the Bankruptcy Court. Mr. Beck sought and obtained a rare Writ of Certiorari from the United States Supreme Court in the case entitled Beck v. PACE. After oral argument, the Supreme Court ruled unanimously in favor of Mr. Beck and reversed the lower courts’ decisions.
SUNCRUZ CASINOS, LLC, JAB AMERICA, INC. AND VENTURES SOUTH CAROLINA, INC.
In September 2003, Mr. Beck was appointed chapter 11 trustee to operate and sell the business of SunCruz Casinos, LLC and JAB America, Inc. debtors in the United States Bankruptcy Court for the Southern District of Florida. These Debtors, together with the operating affiliate for South Carolina operations, Ventures South Carolina, LLC, owned and operated a 12 vessel day cruise gambling operation from six locations in Florida and one in South Carolina. Revenues exceeded $70 million annually and the companies employed approximately 1000 persons.
At the time of Mr. Beck’s appointment, the Debtors had been engaged in litigation for years with the principal secured creditors. Had the secured creditors prevailed, the chapter 11 cases would have been administratively insolvent and there would have been no source to pay accumulated and ongoing fees and expenses, much less any distribution for unsecured creditors. Mr. Beck negotiated and consummated a settlement with the secured creditors which provided for payment in full of all ongoing administrative expenses and fees and provided for a distribution to unsecured creditors of an estimated 20%.
The efforts of Mr. Beck included restructuring management and operations through the employment of a management consultant and solidifying location leases to ready the companies for sale. Mr. Beck continued the employment of an investment banker to solicit offers for sale of the operations, vessels and business. After extensive marketing and negotiations, a successful sale was approved and consummated in April of 2004 for aggregate consideration of over $35 million. A liquidating chapter 11 plan for SunCruz and affiliates was negotiated with the secured creditors and was confirmed. Mr. Beck was appointed Plan Administrator and, in that capacity, completed the wind up matters to implement the plan.