Commercial Mortgage's 2nd CEO hits the road

By Sean F. Driscoll

BusinessRockford.com

The bankrupt Commercial Mortgage & Finance is losing its second chief executive officer in three months.

David Satek, who took the company’s helm Jan. 1, will resign at the end of the week. Satek first served as president of the company’s CMF Mortgage Co. subsidiary before taking the reins of the parent after then-CEO Anthony D’Agostino retired in the wake of harsh criticism of his leadership.

“In view of the bankruptcy filing and taking into consideration the recent concerns of the creditors committee, it seems evident that my services to the company are no longer necessary,” Satek wrote in his resignation letter. “I would have preferred to carry through to the finish, whatever the personal discomfort it would have involved. But the interests of the creditors must always come before any personal considerations.” (Read the full letter here.)

Rockford attorney Brad Koch said the five-member creditors committee, which is charged with representing the interests of all 1,400 creditors in the case, had concerns about the number of employees at the company and the payroll costs.

“The committee felt (Commercial Mortgage) had too many members of its staff and the amount of compensation that was being paid (was too high) in light of the minuscule amount of business that was being conducted since the bankruptcy filing,” he said.

Commercial Mortgage lost more than $45,000 in January, according to the most recent operating report filed with the court. The same month, its payroll expenses were about $42,000; Satek was paid $6,400, not including benefits.

Gregory Jordan, Commercial Mortgage’s attorney, said two administrative employees are being laid off Friday. Their combined monthly pay is about $3,400, excluding benefits, according to the report.

The company, which filed for Chapter 11 bankruptcy Oct. 8, owes more than $60 million to its 1,400 investors, many of whom purchased negotiable promissory notes. The notes were offered on six- or nine-month terms and operated much like traditional certificates of deposit, except that they were not insured from loss by the Federal Deposit Insurance Corp.

The company initially intended to reorganize and emerge from bankruptcy, but it is instead creating a plan to liquidate its assets. The plan is due to be filed with the bankruptcy court in the next month.

Commercial Mortgage & Finance Co. does not own CMF Insurance Agency of Rockford.

Reach staff writer Sean F. Driscoll at 815-987-1346 or sdriscoll@rrstar.com.