Since Fair Finance Co. was forced to liquidate in early 2010 as part of a scandal, the bankruptcy trustee estimates the ongoing proceedings have brought in $1.8 million, including auctioning off collectible cars and artwork from co-owner Timothy Durham.
Another $1.5 million exists in escrowed funds as well as part of a related lawsuit, trustee Brian Bash, a Cleveland attorney, said.
There also appears to be $77 million — perhaps more — not yet in hand that might be collectible and available to distribute at some point to creditors, Bash and his legal team said in providing a monthly status update Tuesday morning via teleconference in U.S. Bankruptcy Court in downtown Akron.
There is also the possibility that significantly more money will be found as the discovery process continues, one lawyer involved in the case said.
Most of the creditors are 5,300 Ohio residents — many of them elderly — and organizations that paid more than $200 million to Akron-based Fair Finance for the firm’s uninsured investment certificates.
Indiana residents Durham, co-owner James Cochran and Rick Snow, the firm’s chief financial officer, are awaiting trial in Indianapolis on federal charges they defrauded investors in a complex and wide-ranging Ponzi scheme that involved multiple businesses and individuals that received money from Fair Finance.
Durham and Cochran bought Fair Finance in early 2002.
The amount of assets that can be collected from all of the various entities, including California comedy movie maker National Lampoon Inc., Durham’s businesses and others is still unknown, said Kelly Burgan, Bash’s legal counsel.
The amount of money that people end up receiving might be very little “to something people might be surprised or pleased with,” she said. “Collectibility is so hard to determine.”
Burgan said she understands that people get frustrated hearing “I don’t know.”
But before any distribution is made, the bankruptcy judge overseeing the process said she will review interim payments for the ongoing legal fees and related professional costs. She asked the U.S. trustee’s office to provide her with the proposed fees by July 22, followed by a teleconference call July 26 to discuss the proposal.
Case 18-months old
Chief Judge Marilyn Shea-Stonum noted that the bankruptcy case started about 18 months ago.
“They’re usually not this large. They’re usually not this complex,” she said. “Your firm [Cleveland firm Baker Hostetler] is incurring ongoing expenses for which it cannot be compensated without a court order.”
Shea-Stonum asked the U.S. trustee’s office to propose “reasonable interim compensation” that would total no more than half of all estimated accumulated fees for the case.
“I believe it is fair to consider an interim fee application a year and a half into the case,” the judge said.
The fees, when filed, will become public record.
Bash is trying to get a receiver appointed for National Lampoon, which Durham ran and was a significant shareholder, to preserve assets at that company. As part of that, he filed a complaint in federal court in California “to avoid approximately $9 million in fraudulent transfers” involving the company.
Burgan said the trustee continues to get numerous telephone calls from people interested in buying whatever assets National Lampoon has available.
“There may be value in that company” beyond its depressed stock price, Burgan said.
Bash said during Tuesday’s teleconference that he is in settlement discussions with other parties and also is “looking at substantial other claims.” He declined to give specifics.
Jim Mackinnon can be reached at 330-996-3544 or email@example.com