More than four months after agreeing on how John Ulmer's defunct Westhaven Group would liquidate assets and reimburse investors, the attorneys responsible for the sale of the group's properties returned to Lucas County Common Pleas Court yesterday seeking guidance on how to implement the plan.
Judge Gene Zmuda heard arguments on issues that have arisen since an order of distribution was created Dec. 15.
The order, issued by former Common Pleas Court Judge Thomas Osowik, outlined how Westhaven's $16 million in assets was to be distributed among the banks, creditors, and as many as 280 investors who are owed $28 million.
Judge Zmuda was asked to clarify issues of implementation in relation to six areas.
He did not say when his decision would be issued.
"As the receiver and the court, we have to consider everyone, both secured and unsecured investors," said attorney Gerald Kowalski, who with John Czarnecki has overseen Westhaven as court-appointed receivers.
Westhaven - which bought, repaired, and sold blighted houses - was accused of securities fraud by failing to match several investments with any property or mortgages of equal value. Several hundred investors stopped receiving returns on the money they turned over to the company when state regulators began combing through Westhaven's books. The Dec. 15 order of distribution outlined how those investors eventually would be reimbursed.
Under the order, banks will receive 95 percent of their money back. Investors with secured mortgages will get up to 80 percent of the value on property notes. The remaining funds will be used for operations and to reimburse unsecured investors.
Yesterday, Mr. Kowalski reported that about $1.6 million of the $2.5 million being held was distributed. He added that 95 of Westhaven's properties are vacant and that seven have month-to-month leases.
Mr. Kowalski handed out a list of properties now on the market and those that will be sold at several auctions scheduled from May 23 through July 14.
Several of the attorneys who attended the 2 1/2-hour hearing expressed concerns that the receivers' request for clarification was instead a method to change the order. They urged Judge Zmuda not to change the meaning of the document.
Requests for clarification focused on issues such as how much interest rate should be paid to investors and how investors should be reimbursed on mortgages that are higher than the sale price of a home.
"Important decisions, business decisions, were made by investors based on this Dec. 15 order," said attorney Joseph Jordan, who represents several investors.
Contact Erica Blake at:
Guidelines: Please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Comments that violate these standards, or our privacy statement or visitor's agreement, are subject to being removed and commenters are subject to being banned. To post comments, you must be a registered user on toledoblade.com. To find out more, please visit the FAQ.