Sunday, November 22, 2009

ONGOING COVERAGE: METROPOLITAN MORTGAGE BANKRUPTCY

Met pursues Sandifur money

Company says CEO's ex-wife should return $2.1 million

John Stucke
Staff writer
May 26, 2006

Helen Sandifur, the ex-wife of former Metropolitan Mortgage & Securities Co. CEO C. Paul Sandifur Jr., is fighting allegations that $2.1 million paid to her by the company should be returned.

Attorney John Bury argued Thursday that attorneys and trustees for Metropolitan Mortgage were too late when they filed a special bankruptcy lawsuit to rewind the payments.

Metropolitan alleges that special dividends paid by the company, some of which went to Helen Sandifur, were improper. The company also alleges that the Sandifurs' divorce settlement was funded in part by the corporate treasury at a time when Metropolitan was technically insolvent.

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U.S. Bankruptcy Judge Patricia Williams acknowledged that the arguments made by Bury, and by John Giesa on behalf of Metropolitan, raised issues that have no clear precedent.

She planned to rule on Metropolitan's recovery claim against Helen Sandifur soon and said she expected her decision to be appealed.

In all, the company is attempting to recoup $8.9 million from the family of its founders, C. Paul Sandifur Sr. and Charles Sandifur.

Though the company has not yet filed a similar recovery claim against C. Paul Sandifur Jr., it reserves the right to do so, Metropolitan trustee Maggie Lyons has said. Sandifur Jr. already faces investor lawsuits and a U.S. Securities and Exchange Commission complaint and is a target of a federal criminal investigation for his role in the company's financial collapse.

About 10,000 people hold $352 million in Metropolitan Mortgage & Securities Co. notes. Another 6,600 people own Summit Securities Inc. notes worth $113 million. Those groups stand to recover just pennies on the dollar for their investments in an initial payout due this summer.

Thousands more investors held $131 million worth of preferred stocks that were rendered worthless in the company's bankruptcy case, filed in February 2004.