Commercial Mortgage payouts to start soon

BusinessRockford.com Staff Reports

ROCKFORD — A year after Commercial Mortgage & Finance Co. filed for bankruptcy, the first checks to repay the defunct company’s creditors are set to be cut later this month.

At least $1 million will be split among the 1,400 creditors, who are collectively owed about $63 million. The payments will be made proportionally to what each investor is owed, so someone who’s owed $10,000 will get about $158.

Attorney Brad Koch, who represents the four creditors who are now running the company, said the funding for this payout comes from the company’s cash on hand and from a few customers who refinanced their residential mortgages and paid off the company’s subsidiary, CMF Mortgage Co.

More checks will come as the company continues to sell its assets. Already the company is planning to sell a four-acre swath at East Riverside Boulevard and Pebble Creek Trail to North Love Baptist Church for $180,000; Koch hopes more sales will follow.

“There’s some activity on a couple of parcels, but nothing concrete to report,” he said. “The debtor has several (land) parcels that were set aside for future development, and there are some discussions about selling those also. The overriding purpose and goal is to maximize the dollars available for creditors.”

About $25 million is expected to be available to repay investors, which mean everyone will get about 40 cents for every dollar they’re owed. The majority of the investors bought promissory notes, which were sold on six- and nine-month terms and promised higher interest rates than traditional certificates of deposit.

The company filed for Chapter 11 bankruptcy on Oct. 8, 2008, after it was unable to pay out when a rash of investors tried to cash out their notes.

Koch said that as the creditors committee and accounting firm Farrell & Associates continue to familiarize themselves with the company’s current financial status, they’ll also be looking through its books to find any “red flag” transactions that could signal financial improprieties.

“There will be someone, I can assure you, taking a long, detailed look back a number of years to try and answer the question of what happened to the money,” he said.

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.

SPECIAL REPORT
Commercial Mortgage & Finance bankruptcy

MOST RECENT HEADLINES
Aug. 19: Last day for Commercial Mortgage
Aug. 18: Creditors back mortgage firm’s liquidation
Aug. 12: Attorney: Liquidation plan likely to pass