E-mail Story
Print Friendly
Send E-mail
Reprint story
Wednesday, March 17, 2010
Vaughan Debts: $97.2 Million
FOR THE RECORD: This story incorrectly reported that a document filed on behalf of Vaughan Company Realtors in U.S. Bankruptcy Court in Albuquerque was missing some information regarding the claims of secured creditors. The document in question was missing some cumulative debt amounts for creditors with unsecured priority claims, a category of creditor that includes several hundred investors. Vaughan Company Realtors' Chapter 11 petition does not list any creditors with secured claims because no company assets were used as collateral.By Richard Metcalf
Copyright © 2010 Albuquerque Journal Journal Staff Writer
The news got worse this week for Albuquerque real estate executive Doug Vaughan's creditors and investors.
New documents filed in his personal bankruptcy show he has assets of about $17 million and total debts approaching $100 million.
Worse for more than 600 investors, the documents show Vaughan used a grab bag of rental housing, his personal home and some vacant land to secure $86 million in real estate loans.
The total value of Vaughan's real estate holdings is listed at $15 million, and the same properties are put up as collateral time and again for different investors to whom he issued promissory notes at lucrative interest rates.
Vaughan is under investigation by both the U.S. Securities and Exchange Commission and the New Mexico Securities Division into how he raised money from investors and then how he spent that money. No charges have been filed.
Vaughan filed a pair of separate but related Chapter 11 petitions in February for himself as an individual and for his 37-year-old residential real estate company. The petitions buy time for Vaughan and Vaughan Company Realtors to come up with separate plans to repay at least some of the debt.
An amended version of Vaughan's original Feb. 22 Chapter 11 petition was also filed Monday to change his estimated assets from less than $50,000 — a low number met with general public disbelief — to the higher totals in this week's filing.
Investors typically loaned money to Vaughan in exchange for promissory notes with a three-year maturity and annual interest rates ranging from 12 percent to 25 percent.
Vaughan provided an additional signed personal guarantee of payment, and the documents say the investments were secured by unspecified real estate that has turned out to be mostly rental housing.
He also provided an executive summary outlining his investment strategy — which did not mention risk — and a list of prominent local people he said would serve as references.
The more than 600 investors are classified as secured creditors in court documents relating to Vaughan's personal Chapter 11 petition. He owes another $11.2 million to unsecured creditors such as insurance companies, banks and other lenders. Vaughan's total outstanding debt is $97.2 million.
On the other side of the ledger, Vaughan's assets amount to $17 million, including $15 million in real estate and close to $2 million in personal property, according to court documents. His personal property is mostly the value of Vaughan's various business interests.
Vaughan's real estate portfolio consists of 29 properties, all but five of which are worth less than $500,000 each. The portfolio does not include the kind of property investments – apartment complexes, shopping centers, big office buildings – that might be associated with $86 million in investment money.
Over-leveraged
Most of Vaughan's real estate holdings are grossly over-leveraged. For example, his three-story mansion in a gated community in the Northeast Heights is valued at $3.2 million but has $79.1 million in secured claims against it.
Thirteen townhouses near Old Town, valued at $135,000 apiece, each carries $78 million in claims.
The claims overlap because the same properties were used to secure literally hundreds of loans.
Not all of the 29 properties listed in court documents were used to secure loans made by investors, according to court documents.
Three properties appear to be clear of investor-related claims, including the office occupied by Vaughan's commercial real estate company at 6703 Academy NE, a 2,800-square-foot adobe casita at the upscale Las Campanas subdivision in Santa Fe, and 8.5 acres of prime commercial land on U.S. 550 at the northeast corner with Don Tomas in Bernalillo. All three are worth more than the claims against them, which are likely to be balances owed on mortgages.
The latest documents filed in connection with Vaughan Company Realtors' Chapter 11 petition are incomplete due to a "software glitch," said Dave Giddens, bankruptcy attorney representing the company.
The documents show no creditors with secured claims, which is wrong. Vaughan Company Realtors has roughly the same number of creditors with secured debt as Vaughan does in his personal petition, they just don't appear in the recent filings, he said.
Once the software glitch is corrected, Giddens said a complete document showing the full list of secured creditors, or basically investors, will be filed with the U.S. Bankruptcy Court next week.
Vaughan Company Realtors' court documents show $18 million owed to unsecured creditors, including the state for back taxes, as well as vendors and lenders. The company's assets were listed as $643,363, most of which is money owed to the company as accounts receivable, documents say.
You also can send comments via our comment form
|
|
