Thousands of people across the Northwest who parked their savings in Metropolitan Mortgage & Securities, only to have the Spokane financial...
Thousands of people across the Northwest who parked their savings in Metropolitan Mortgage & Securities, only to have the Spokane financial conglomerate go bankrupt amid a barrage of questionable business practices, may get more money back than previously thought.
In an amended reorganization plan filed over the weekend, Metropolitan and its sister company, Summit Securities, said holders of their bonds and notes might receive 23 to 25 cents on the dollar, compared with 10 to 15 cents estimated in the first plan filed in August.
That higher payout depends on how much Met and Summit’s insurance-company subsidiaries will fetch in a planned sale.
Last month, regulators in Washington, Idaho and Arizona announced they were putting the subsidiaries up for sale. The regulators had taken control of the companies in March 2004, shortly after Met and Summit filed for Chapter 11 bankruptcy protection.
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The regulators hope to announce a winning bidder by June.
The latest reorganization plan estimates creditors could get 10 cents on the dollar from the insurer sales.
Other sources of reimbursement include sales of Met’s and Summit’s real-estate holdings and their large investment portfolios, and settlement of pending lawsuits against the firms’ former directors and officers.
Met and Summit were controlled by Spokane businessman C. Paul Sandifur Jr. The companies raised hundreds of millions of dollars by marketing debentures, investment certificates and other unsecured notes, largely to people at or near retirement age who were seeking safe, steady returns.
But after the companies’ collapse more than a year ago, it was learned that for years they had engaged in sham real-estate transactions, overvalued assets and swapped cash and assets between themselves and their subsidiaries — all to maintain the appearance of a thriving, successful business, which was essential if they were to sell more notes.
More than 10,000 people hold $352 million in Met securities; about 6,600 hold $113 million in Summit instruments. Thousands more hold $131 million worth of preferred stock from Met or Summit; those stockholders, like Sandifur, will get nothing.
Sales of Met’s assets are expected to raise $42 million for noteholders, according to the revised plan, while selling Summit’s assets will raise about $22 million. Settling the various suits against the former directors and officers could raise another $4 million to $4.5 million.
Drew DeSilver: 206-464-3145 or firstname.lastname@example.org