Mark Heschmeyer of CoStar Group wrote a fine article “UPDATED: Owner of Bankrupt 1031 Exchanges Promises to Make Good” on 1031 Exchange king Ed Okun’s plans to “make good” on $150 million worth of outstanding debt owed to investors caught up in the collapse of his empire.
Since the 1031 Exchange Group’s May Chapter 11 filings, Ed Okun has been”negotiating with both the debtors and the unsecured creditors in the case, according to bankruptcy court filings.”
Okun is working with Stillwater Capital Partners Inc. a New York hedge fund management firm that specializes in, according to Heschmeyer, “alternative investment services.”
The third moving part to this deal is with JPS Capital Partners out of New York. JPS Capital Partners specializes in commercial real estate bridge loans on what is considered tough to fund deals.
According to Heschmeyer’s findings: “Under terms being discussed, a lender (debtor in possession) would fund the debtors, which would in turn pay off the creditors, including possibly paying administrative expenses of the chapter 11 cases and other expenses.
Okun is offering “. . . up to all of their (Okun Holdings Inc. & IPofA) material assets to the potential lender in connection with the loan transaction.”
Details of these transactions were to be “sealed” by the court prompting a firestorm of criticism. Heschmeyer’s investigations found that Okun is fighting to seal the documents because public disclosure of these records “would give competitors to the Okun Entities’ access to confidential and commercial information related to business relationships which are in the process of being negotiated. Such information, if disclosed, would significantly hamper the Okun entities’ ability to conduct business, which directly impacts the recoveries of creditors in these cases.”
US Attorney Adams is fighting to make the records public. Her argument is that the real estate information is of public record already; in addition she states that this information does “not qualify as protected information under the Bankruptcy Code.”
Another red flag was that, according to Heschmeyer, the extent of Okun’s real estate holdings are not known. Is he hiding assets? You make your own judgment on that idea. Heschmeyer asserts that CoStar Group has identified “numerous properties” through public records and CoStar databases. These properties in question are believed to be “either owned, managed or leased in part by affiliates of IPofA or other Okun affiliates. As Heschmeyer states “We list these properties in The Watch List, a weekly column of distressed commercial properties, mortgages and corporate news.”
So the fight is on to uncover all of Ed Okun’s assets in order to hold him accountable for the horrific actions of his 1031 Exchange companies. Stay tuned in as more information is soon to follow. In the meantime anyone with information or new developments to share, please do so by writing deansguide.