Ameritrans was a closed-end investment company formed in 1998. It's subsidiary, Elk Associates Funding Corporation made loans to finance the acquisition and operation of small businesses as permitted by the U.S. Small Business Administration.
Ameritrans also made direct loans to and directly invested in opportunities that Elk historically had been unable to make due to SBA restrictions. These loans were primarily secured by real estate mortgages or, in the case of corporate loans, generally are senior within the capital structure. Investments were made in four types of securities: 1) Corporate Loans Receivable; 2) Commercial Loans Receivable; 3) Life Insurance Settlements and 4) Equity Investments.
On 10/31/12, Elk entered into a Settlement Agreement with the SBA pursuant to which Elk agreed to surrender its SBIC license. In connection with the entry into the Settlement Agreement, Elk also executed and delivered a Consent Order of Receivership appointing the SBA as permanent, liquidating receiver of Elk, to be filed by the SBA in the event that Elk failed to make payments to the SBA in accordance with the Settlement Agreement. On 4/15/13, the United Stated District Court for the Eastern District of New York entered the Consent Order, in the proceeding entitled United States of America, on behalf of its agency, the United States Small Business Administration v. Elk Associates Funding Corp . (Case No. 2:13-cv-01326) . The Court appointed the SBA as the receiver of Elk for the purpose of marshaling and liquidating all of Elk’s assets and satisfying the claims of creditors therefrom in the order of priority as determined by the Court.
On 6/26/13, Robert C. Ammerman filed an action in the Court of Chancery of the State of Delaware against the four Preferred Directors of Ameritrans Capital Corporation elected by the separate vote of the holders of the Company’s 9 3/8% Participating Cumulative Preferred Stock. Ammerman, Peter Kagunge, Frank Strohm and Arthur D. Little became became the Preferred Directors. On 7/12/13, all of the remaining corporate directors resigned. Ammerman became the interim CEO, President, CFO, Treasurer and Secretary on 7/22/13. Ammerman owned 122,736 shares or 40.9 percent shares of preferred stock (at a reported cost of $916,529.82 or an average of $7.47 per share) on that date. In addition, he also owned 31,607 shares of common stock as late as 11/02/12.
Mitchell Partners, L.P. owned 29,942 shares of 9 3/8% Participating Cumulative Preferred Stock or 9.98 percent at 9/30/11.
The company filed for Chapter 7 on 10/05/16 (Case No. 1:16-bk-13842). John Desmond was appointed trustee. The SBA, trustee and former executives are all engaged in litigation. In addition, the trustee and his counsel, Riemer & Braunstein, LLP, have had some limited success in recovery activities tied to past investments.