Cavista Corp., the area's largest residential-commercial real estate and development company, laid off many of its administrative employees yesterday.
The decision, brought about by financial problems at Cavista, affects about 50 people at Cavista and two subsidiaries, Cavalear Realty and Zyndorf-Serchuk property management. Unclear is the status of five administrative employees at Cavista's commercial real estate company, Zyndorf-Serchuk.
Cavalear and Zyndorf-Serchuk are two of the area's most prestigious names in real estate.
Unaffected by the layoffs are approximately 300 Cavalear residential real estate agents, who are independent contractors, according to the consultant charged with steering Cavista through its recent financial difficulties.
“I want the sellers of residential homes [listed with Cavalear agents] to know we are doing everything we can to preserve the fact that they want their house sold,” said John Kolpien.
Mr. Kolpien confirmed the layoffs, but he would not disclose how many employees were affected.
A Cavalear employee who attended the afternoon meeting at the Toledo Board of Realtors said all Cavista and Cavalear employees were told to be at the board office on Republic Boulevard South at 4 p.m. She said she counted 51 employees at the meeting directed by Mr. Kolpien.
“Absolutely everyone was told to go to the unemployment office tomorrow morning,” said the Cavalear employee, who asked not to be named.
The meeting lasted 75 minutes. A number of the employees left in tears and declined to comment.
The Cavalear employee said Mr. Kolpien told the employees that the company failed to pay its health insurance premiums for November and December and that unless the $19,500 payment is made by Wednesday the employees will be unable to apply for supplemental insurance, known as COBRA.
The employee said Cavista officials told the employees the company is broke and that the employees would have to pay the $19,500 premium to qualify for COBRA.
“We're not going to get our paychecks tomorrow,” the employee said, “so we have nothing to pay for it [with].”
The employee said she was told that Cavista and Cavalear offices on Monroe Street in Sylvania would be locked today because Cavista failed to pay its rent.
Mr. Kolpien declined to confirm the office closings. He described the situation as “day to day.”
Officials at Zyndorf-Serchuk's commercial brokerage office at Four Seagate said they were told their rent had been paid and that the office would be open today.
As with Cavalear Realty, Zyndorf-Serchuk agents are independent contractors and are continuing to operate as usual, the officials said.
Zyndorf-Serchuk's property management company is at Cavista's Monroe Street office. That company likely will be moved to Zyndorf-Serchuk's downtown office, company officials said.
The layoffs stem from legal and financial problems confronting Edwin Bergsmark, Cavista's 60-year-old chairman and chief executive officer who bought Cavalear Realty in 1996 and Zyndorf-Serchuk in 1999.
Three of the area's leading banks sued Mr. Bergsmark earlier this month for defaulting on loans totaling more than $11 million.
On Dec. 14, sheriff's deputies tagged more than 600 personal items at Mr. Bergsmark's Sylvania Township home as collateral for one of the bank loans.
He also is at the center of a criminal probe by the Lucas County prosecutor for his role, and that of a former city housing commissioner, in a condominium conversion project at Beacon Place in central Toledo.
A leading civic figure, Mr. Bergsmark resigned as chairman of the Toledo Mud Hens on Dec. 17.
Three days later, Coldwell Banker, a top national real estate franchisee, ended its eight-month relationship with Cavalear and sued the company and Mr. Bergsmark and Zyndorf-Serchuk.
Earlier this month, Cavista paychecks started bouncing, but were later made good. KeyBank, a Cavalear creditor, soon took charge of the company's financial decisions.
Mr. Kolpien was hired a short time later to sort out the mess.
He told the employees yesterday afternoon that he had developed what he thought were several plans to save the company, even working late Christmas Eve night.
But the weight of all the recent events was too much to bear, he said.
Mr. Kolpien said Cavista will continue to function but declined to say in what form or how many people would be employed.
Cavalear's president, Bill Conklin, present at the meeting, said he and a group of investors are still trying to buy Cavalear and could know whether their bid is successful this afternoon.
“I still have a job,” he said, but he would not elaborate.
Mr. Bergsmark has declined comment for months.
“It's very sad that one man can run a great company like this into the ground in five short years,” the Cavalear employee said.