Creditors of two Tacoma-based real estate developers have asked a bankruptcy judge for some time to evaluate the man appointed to run the developers' financial affairs.
The federal trustee's office named Seattle accountant Eric Orse to step in and straighten up Tom Price and Hyun Um's business so they can repay their creditors. On Friday, less than 24 hours after Orse got the job, the attorney for the creditors committee asked the court for a temporary delay in Orse's appointment.
"Hopefully it's a really short delay," said Larry Ream, the attorney for the unsecured creditors committee. Ream said the creditors aren't yet objecting to Orse's involvement, but that they want to know more about him. In documents filed with the bankruptcy court, Ream wrote that the committee had planned to interview several candidates for trustee on Friday.
"Maybe we'll end up being okay with Eric," Ream said in an interview. "We want to at least talk to the guy and see his background and experience, and whether he understands the background of the case and how complicated it will be."
The decision about trustees rests solely with the Office of the United States Trustee, which is under the umbrella of the federal Department of Justice. People involved in bankruptcies can make recommendations. Orse's name was among several the creditors committee suggested, Ream said, but that it had not yet made a recommendation. Ream said he's scheduled a conference with the trustee's office on Monday to sort it out.
Price and Um filed for Chapter 11 bankruptcy protection in August 2010 with $300 million in debt related to their real estate business, Prium Cos. In bankruptcy they have contended that they personally can't repay more than $10,000 a month, though their multiple subsidiaries generate substantial cash, the men draw $20,000 monthly salaries each and live in waterfront homes they rent from themselves for $100.
How much money Prium and its subsidiaries generate is a mystery. Three forensic accountants haven't been able to discern the company's finances as it moves through dozens of subsidiary limited liability companies, though all estimate the cash flow in the millions of dollars. Creditors have contended Price and Um are running a shell game.
Meanwhile two separate state courts in the last year have found the men to have committed fraud and evidence destruction. Bankruptcy judge Paul Snyder finally had had enough and put a trustee in charge of the men's finances on Tuesday.
Trustees are powerful. They stand in for the business owners, have the power to hire, fire and reorganize the business in the best interest of creditors. They also have the power to investigate and refer for prosecution fraudulent behavior.
Orse didn't respond to an email request for an interview on Friday. According to his website, he lives in Seattle. He's a certified public accountant who started his career with Price Waterhouse's audit group. In 1996 he opened his own consultancy firm that advises companies in financial distress. He's been hired as the top financial executive for several companies as they reorganized through Chapter 11 bankruptcy, including the publicly traded Wade Cook Financial Corporation and telecom company edge2net. He also worked with FreeInternet.com as it liquidated through Chapter 7 bankruptcy.