EFI investors, creditors planning participation
July 9, 2008
By DANIEL BLACKBURN
Investors, builders, and creditors misled by Paso Robles hard money lender Estate Financial Inc. (EFI) are forming a pair of “advisory” committees to participate in an upcoming series of bankruptcy hearings and related actions promising to be both complex and convoluted.
Meeting privately Tuesday at the Carlton Hotel in Atascadero, 53 people financially entwined with the sinking financial institution laid plans for keeping abreast of, and contributing to, future federal court proceedings.
Chapter 11 bankruptcy filings – one voluntary, one not – have stopped the once successful EFI in its tracks. Karen Guth and her son and partner, Joshua Yaguda, EFI’s two principals, resigned early this week and have been replaced by new managers.
“You have now been heard,” developer Ron Cooper told the assembly, attempting to reassure those in attendance that their views would be articulated, and their presence felt, as the pair of bankruptcies wind through the courts.
Cooper organized a group which pushed the Estate corporation into involuntary bankruptcy in late June. Guth and Yagunda followed that action by voluntarily placing the EFI Mortgage Fund LLC under Chapter 11 reorganization protection last week.
Guth and Yaguda “did the smart thing” by resigning from EFI: “They gave up. They really had no options,” said Cooper.
Cooper said he expects three to six months to pass “before we all have a clearer picture of what happened and where our money went.” He told the crowd, “I borrowed from a crook, you invested with a crook. And we all know what happens then.”
EFI’s new chief executive is M. Freddie Reiss, said to be an expert in restructuring companies. Bankruptcy attorney David Gould of Calabasas will be the mortgage fund’s new manager.
The investor-builder-creditor committees — one monitoring the fund bankruptcy and the other the corporation – will each have five to 10 members and each will have legal standing during all upcoming proceedings.
Tags:, EFI, Estate Financial