STBPQ remains in Chapter 7 (1/13/16)
On January 11, 2016, Second Pioneer Corporation (“Second Pioneer”), an indirectly wholly-owned non-debtor subsidiary of Southeast Banking Corporation (“SEBC”), closed on a sale of the “Belfort” property – an undeveloped parcel of real property – to Rimrock Devlin Development LLC, for a total cash purchase price of $2,000,000. After expenses and other closing costs, the proceeds of the sale upstreamed to the SEBC estate were $1,859,838.90.
After the closing of the Belfort sale, the last remaining material non-cash assets of SEBC are the interests of its wholly-owned nondebtor subsidiaries Southeast Properties, Inc. and SWQ Holdings, Inc. (the “Non-Debtor Subsidiaries”) in undeveloped real property and other related property interests (“Southwest Quadrant”) owned 70% by the Non-Debtor Subsidiaries and 30% owned by a partnership not affiliated with SEBC, the Southwest Quadrant Joint Venture (“SQJV”).
By order entered on September 9, 2015, the Bankruptcy Court authorized SEBC to proceed with the sale of the Non-Debtor Subsidiaries’ real and other related property interests in the Southwest Quadrant to Kent Schmidt and James H. Efstathion (who are the joint venture partners in SQJV) or their successors, assigns or designees (“Purchasers”), for a total cash purchase price of $3 million, plus half of all closing costs and assumption of all ongoing obligations (the “SQJV Sale”). Under the terms of the sale contract as amended, the Purchasers have made a non-refundable deposit of $25,000 and an additional refundable deposit of $100,000 with the inspection period to expire February 8, 2016. Assuming the Purchasers do not elect to cancel on or prior to February 8, 2016, the Purchasers have until March 9, 2016 to close.
If the SQJV Sale closes, the Trustee will then begin to take the necessary steps to wind up the SEBC Chapter 7 bankruptcy case, prepare his final report, and make distribution to creditors of the funds to which they are entitled. The choice of the mechanics of making such distribution will be explored and discussed with the constituents, United States Trustee and, as appropriate, the Court.
As of January 12, 2016, and including the proceeds of the Belfort sale, the SEBC estate has cash on hand of approximately $13,635,556.75. If the SQJV Sale closes, the SEBC estate expects to receive additional cash of approximately $2,700,000, resulting in approximately $16,335,556.75 in cash on hand. Projected expenses to close the case, including payment of trustee and professional fees, as well as a conservative contingency reserve, are approximately $2,335,717.85, resulting in estimated projected funds available for distribution to creditors of approximately $14,000,000. See attached chart. Preliminary estimates of projected distributions are set forth in the attached table, along with Exhibit A thereto. The foregoing amounts are estimates only and could vary materially.
As indicated above, the mechanics of making distributions to creditors will be discussed with various parties and has not been determined. Given the logistics involved in making distributions to holders of six different bond issues, including two issues of EuroNotes and the need to prepare and file final tax returns and to comply with other requirements of winding down the estate, the Trustee anticipates that it will take several months following the closing of the Southwest Quadrant property before final distributions can be made and the SEBC Chapter 7 case can be closed.
