James River Holdings Corp (fka JRIV)

[Big Brother]

Yeah what a complete disaster, I'm glad I never picked up any shares of this, I dodged a bullet there....phew.

SPRINGFIELD, MO (May 12, 2014) – James River Holdings Corporation OTCQB: JRIV) today announced it has ceased operations.

In December 2013, the Company spun out its real estate division, Property Partners, LLC into a separate operating company owned pro-rata by James River shareholders. This, in response to overwhelming guidance from the investment banking community which repeatedly expressed distaste for real estate related investments as the Company sought to raise capital in meetings with New York investment banking firms. More recently, the investment banking firm contracted to raise capital for the company failed to deliver on assurances made regarding the bankability of the Company. This resulted in a cash flow crisis that has disabled the company from further operations.

Despite upbeat news reports regarding real estate in some parts of the U.S. real estate prices in Springfield, Missouri continue to languish, beating down valuations on the Property Partner’s portfolio. An April 24, 2014 article from the New York Times titled Why the Housing Market is Still Stalling the Economy and a May 1, 2014 article from ETF.com titled Shiller: Allure of Home Ownership Fading clearly articulate the stream against which real estate investors continue to swim; a difficulty that plagued the Company and continues to affect Property Partners.

In January of 2014, Property Partners contracted Williams & Williams, the Tulsa, Oklahoma based real estate marketing firm to begin selling its portfolio to provide investors the liquidity anticipated at the time of their investment. In 60 days of marketing to thousands of buyers in its network Williams & Williams brought only three offers, at 12%, 27% and 55% of original bank appraisals. These offers were rejected as inadequate to pay off the mortgage debts on the properties. Total mortgage debt on the over 200 properties is approximately $13 million, all of which is personally guaranteed by the Company’s largest shareholder, James Watts.

In March of 2014, Property Partners began soliciting competitive market analysis from Springfield, Missouri-based real estate firms. Those valuations came in at 45-75% of original bank appraisals, the higher valuations being barely adequate to pay off the mortgages on some individual properties.
Property Partners began listing for sale those properties whose competitive market analysis indicated a possible sale price adequate to satisfy the indebtedness for that particular property, and currently has over 100 individual properties listed. Response from buyers has been soft to date, with only 4 of over 200 properties going under contract.

Property Partners will liquidate its residential housing portfolio, attempting first to satisfy the outstanding mortgage balances. Upon complete payoff of all outstanding debts, the remaining proceeds—if any—will be distributed to unit holders. Shareholders are advised to assume such a distribution will not occur, but if it does, it will likely be two to five years away.

The impact of continued real estate valuation problems on the Company, coupled with its ongoing inability to raise additional capital, has hampered the Company’s stock since the inception of trading. Though prices have been quoted on the Over the Counter exchanges, very few shares have traded, or are expected to.
The Company currently has a civil action filed against Robert G. Sorensen, Patricia J. Sorensen, and Thomas R. Sorensen seeking $16,000,000 in damages for breach of contract and fraud. The Company currently has a civil action against Anton & Chia, LP seeking unspecified damages for fraud. If the company prevails, proceeds will be used first to reduce corporate debt after which any excess would be distributed to shareholders.

The Company has ceased trading. It’s remaining assets will be liquidated to pay off outstanding debt and negotiations with creditors to resolve outstanding debts—which exceed the expected value of its remaining assets—has commenced. Apart from successful collection on the above lawsuits, it is not expected that anything will be left to distribute to shareholders once the debts are resolved. Shareholders should consult their tax advisor regarding the possible deductibility of any potential capital losses.

The Company has terminated Hanover-Elite, the firm handling its shareholder relations. No further information is available at this time. Any additional information will be disseminated through www.JRHoldings.com as it becomes available.