Date: Sat, 14 Nov 1998 01:29:13 -0500
From: Darrell Todd Maurina <Darrell128@aol.com>
Reply-To: Darrell128@aol.com
Organization: Christian Renewal/United Reformed News Service
Subject: NR 98109: Bankruptcy Court Appoints New CEO for IRM; Plans Announced
to Drop Lawsuit
NR #1998-109: Bankruptcy Court Appoints New CEO for IRM; Plans
Announced to Drop Christian Reformed-Led Lawsuit
The long-running Christian Reformed conflict over the potential
loss of $228 million invested in the California-based IRM real estate
corporation may finally be winding down toward a peaceful resolution. On
November 4, a press release bearing the name of Preston Kool, the
first-named plaintiff in the lawsuit filed by twenty individual
investors, three CRC agencies, and the CRC-related Barnabas Foundation,
announced the appointment of a new chief executive officer for IRM: John
Connolly IV. Due to Connolly's appointment, the press release announced
that "the petitioners are withdrawing their action from the state court
and have taken steps necessary to remove, without prejudice, their
motion for a trustee pending in the bankruptcy court."
Mr. Connolly will have the responsibility to do what the
Kool petitioners had sought from the beginning: to fairly and
independently represent the interests of all investors and creditors,"
according to the press release. "As a result of Mr. Connolly's
appointment, the petitioners are withdrawing their action from the state
court and have taken steps necessary to remove, without prejudice, their
motion for a trustee pending in the bankruptcy court. Finally, the
petitioners encourage all parties to support the official investors
committee as it works with Mr. Connolly to formulate a fair and
equitable plan."
NR #1998-109: For Immediate Release:
Bankruptcy Court Appoints New CEO for IRM; Plans Announced to Drop
Christian Reformed-Led Lawsuit
by Darrell Todd Maurina, Press Officer
United Reformed News Service
(November 11, 1998) URNS - The long-running Christian Reformed conflict
over the potential loss of $228 million invested in the California-based
IRM real estate corporation may finally be winding down toward a
peaceful resolution.
On November 4, a press release bearing the name of Preston Kool,
the first-named plaintiff in the lawsuit filed by twenty individual
investors, three CRC agencies, and the CRC-related Barnabas Foundation,
announced the appointment of a new chief executive officer for IRM: John
Connolly IV. Due to Connolly's appointment, the press release announced
that "the petitioners are withdrawing their action from the state court
and have taken steps necessary to remove, without prejudice, their
motion for a trustee pending in the bankruptcy court."
The press release struck a positive note, calling Connolly's
appointment by the US Bankruptcy Court "major progress in the IRM
situation."
"As you may recall, the petitioners had asked a state court in
California to appoint a receiver for IRM," according to the press
release. "The goal of this action was to obtain competent and
independent management of IRM. Above all, the petitioners wanted to make
sure that every party would receive their share of the real value of
IRM. Following IRM's voluntary bankruptcy filing, this request was
brought to the bankruptcy court by the same petitioners in the form of a
motion for the appointment of a trustee."
"Mr. Connolly will have the responsibility to do what the Kool
petitioners had sought from the beginning: to fairly and independently
represent the interests of all investors and creditors," according to
the press release. "As a result of Mr. Connolly's appointment, the
petitioners are withdrawing their action from the state court and have
taken steps necessary to remove, without prejudice, their motion for a
trustee pending in the bankruptcy court. Finally, the petitioners
encourage all parties to support the official investors committee as it
works with Mr. Connolly to formulate a fair and equitable plan."
The press release cites Kool's telephone number and requests
that reporters call him for further information. However, when reached
by telephone, Kool said he hadn't seen the press release, didn't know
who the committee members are, and referred detailed inquiries to the
Christian Reformed denominational offices.
Kool said the primary reason he and the other plaintiffs had
filed their court action was that it initially appeared that only the
Grand Rapids-based Eenhoorn corporation was bidding to purchase IRM.
"The problem was that people were getting the message that there was
only one bidder interested. That's not true, now there are a number of
bidders interested," said Kool. "Obviously one of our goals was to get
rid of the management that put this corporation is such a bad state.
That was our other goal."
Kool declined comment on who originally came up with the idea of
filing court actions against IRM or why he was designated as committee
chair and first named plaintiff. "I don't think it was my idea, they
asked me to do a job, and I did it," said Kool.
CRC Executive Director of Ministries Dr. Peter Borgdorff later
confirmed that Kool is the committee chair and that the other committee
members are Julius Mellema, an individual investor in Grand Rapids;
David Vander Ploeg, executive director of the Barnabas Foundation, and
Ken Kingma, an attorney from the Detroit suburb of Troy, Michigan.
According to court documents, Kool is one of the smaller IRM investors
among the plaintiffs, with $50,000 in IRM; Mellema has $25,000; Kingma
has $20,000. Vander Ploeg and his wife Sheryl have a total of $213,000
personally invested in IRM in addition to the $12,011,062 invested by
the Barnabas Foundation.
The investments by the twenty individual members represent only
5.3% of the total $24.6 million of investments represented by the Kool
lawsuit. Although none of the denominational agencies have official
representation on the Kool plaintiff steering committee, Borgdorff said
the denomination had been providing assistance to the Kool plaintiffs.
"These are people who are basically volunteering their time to pursue
these matters and so we have tried to be helpful to whoever needs help,"
said Borgdorff.
Borgdorff, whose office transmitted the press release, noted
that Kool had been on vacation when the steering committee decided to
withdraw the court action. "You just saw vintage Pres Kool, that's all,"
said Borgdorff. "He's a good fellow, but he doesn't worry about details,
that's true."
Borgdorff said he wasn't sure who had originally asked Kool to
serve as first named plaintiff in the lawsuit. "It may have been the
attorneys who said we need someone who is willing to be the lead
petitioner, and at that point Kool was asked if they might use his name
in that capacity and he agreed to do that," said Borgdorff. "There was
no special standing in that, but everyone knew that the suit, in the way
the court works, is normally known by the first person listed, just like
the current suit will be known as the Vanni suit. It doesn't mean he was
the only one, it doesn't mean he was the biggest investor, it doesn't
mean he was calling all the shots, it's just the Christian name, or the
not-so-Christian name given to the suit."
According to Borgdorff, a decision was made early on to have an
individual rather than a CRC agency be the first named plaintiff in the
court action. "Before officially there was a petitioner and before there
was an official petitioners committee, there was no effort on the part
of this group to make the denomination the lead agent," said Borgdorff.
"Now as it turned out the institutional money was by far the biggest
chunk of the total revenue represented in the suit, but that really
wasn't the point because the dollars were secondary to the diversity of
the petitioners, large or small."
While the press release says the Kool petitioners are
withdrawing their court actions, calls to officials in California
indicated that hasn't yet been done. Kool said he didn't know when the
legal process would be finished and referred inquiries to denominational
officials. After some further checking, CRC officials learned that their
lawyers had postponed withdrawal from November 9 to November 23.
"One of the pieces of information I learned from [denominational
financial officer] Ken Horjus when I spoke with him just a little while
ago is that the scheduled meeting of the court for Monday has been
postponed another week because the attorneys were not able to complete
the details of whatever it is they need to do in order for the judge to
give his final approval," said Borgdorff. "The judge has already
approved the appointment of Mr. Connolly. The only thing that has not
been approved, as I understand it, are the contractual negotiations
between Mr. Connolly and the Creditors Committee, for compensation and
other contract language. We are now waiting simply to be told that
process is now finished, but have no voice in that, because that is
entirely up to the Creditors Committee and we are supportive of them
doing their work."
Creditors Committee chairman Jay Mol didn't appreciate the
confusion over whether the Kool lawsuit had been withdrawn and when it
would be withdrawn.
"They have not withdrawn it; that's basically a statement of
anticipated withdrawal," said Mol.
Mol said he didn't understand why the lawsuit had ever been
filed or why it was now being withdrawn. "In there they seem to imply
that they got what they wanted so they are dropping the lawsuit," said
Mol. "The IRM principals have agreed for many, many months to step aside
if it were done in a way that would not damage the operation or the
investments of the creditors."
"The church and Kool refused this, wanting a dramatic walking
off the job and an immediate dismissal of all the participants
involved," said Mol. "That's not an orderly business type of thing to do
and I'm shocked they do not understand this. If they had done it in a
legitimate kind of way this would have been accomplished months ago, but
they wanted to do it in a vindictive way."
"They have not obtained anything that had not been agreed to all
along, the question was whether it would be done in an orderly manner or
a way that jeopardized the investments," said Mol.
Creditors Committee secretary Michael Vanni said that even if
the Kool plaintiffs do withdraw their court action, it wouldn't affect
his own $45 million lawsuit against the Christian Reformed Church's
attorneys.
"None of this represents motivation to drop my law suit," said
Vanni.
"First, the Kool lawsuit is still in place; they have not
dismissed that, they have only promised to drop their motion for a
trustee," said Vanni. "Second, every informed person with whom I have
spoken suggests that I'm holding a winning hand. If they are correct,
then the hardship foundation that has been set up in Western Michigan
[to assist investors who have lost large amounts of personal savings in
IRM] will get the funding it needs."
"This promises to be considerably more effective in resolving
individual problems than the witch hunting and stonewalling that has
been going on for nearly a year," said Vanni.
Cross-References to Related Articles:
#1998-006: Classis Chatham asks Top Christian Reformed
Administrative Committee to Appoint Independent Investigators of $11.5
Million in Questionable Investments
#1998-028: Classis Lake Erie Overtures Christian Reformed Synod to
"Ensure the Editorial Freedom of the Banner"
#1998-067: IRM Debate Extends Synodical Session
#1998-068: Synod Responds to Possible Multimillion Dollar Fund Loss
#1998-080: IRM Investment Debacle Leads to Litigation; Estimate of
Funds at Risk Balloons from $11.4 to $228 Million
#1998-083: IRM Declares Bankruptcy; CRC Files More Litigation
Seeking Removal of IRM Management
#1998-084: Bankruptcy Court Postpones Action on CRC Lawsuit to
Remove IRM Management; "Concerned IRM Investors" Leader to Chair New
Investors/Creditors Committee
#1998-091: IRM Management Resigns as General Partners; John Barnard
to Become CEO of Troubled California Real Estate Firm
#1998-103: A Glimmer of Good News: Home Missions May Receive
Partial Payment on $1.1 Million of $7.925 Million Invested in IRM
California Real Estate Corporation
#1998-104: San Francisco IRM Investor Files $45 Million Suit
Against Attorneys Retained by CRC Agencies and Individual Investors
#1998-114: Eenhoorn Announces November 15 Deadline; Paul Heule
Expects to Withdraw Offer to Purchase IRM Assets
#1998-115: Christian Reformed Officials Explain Lawsuit Against IRM
Contact List:
Dr. Peter Borgdorff, Executive Director of Ministries, Christian
Reformed Church
2850 Kalamazoo Ave. SE, Grand Rapids, MI 49560
O: (616) 246-0832 ¥ H: (616) 957-3288 ¥ E-Mail:
borgdorp@crcna.org
David Buurma, Senior Vice President for Client Services, IRM Corporation
Office: 2151 Salvio St., Suite 325, Concord CA 94520
Mailing: PO Box 3000, Concord, CA 94522-3000
O: (925) 676-1966 ¥ FAX: (925) 676-1744
Jay Mol, Chairman, Creditors Committee
O: (616) 669-8960 ¥ FAX: (616) 669-5368 ¥ E-Mail: jcmol@aol.com
Michael Vanni, Secretary, Creditors Committee
H: (415) 861-8091 ¥ O: (415) 431-8747 ¥ FAX: (415) 431-8758
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