PHOENIX (BP)–Baptist Foundation of Arizona investors may receive the first checks repaying a portion of their funds by the end of the year.
Investors voted to approve the foundation’s liquidating plan of reorganization, and U.S. Bankruptcy Judge George Nielsen Jr. confirmed the plan from the bench Nov. 16. In addition, the court approved a settlement agreement giving preferred status to investors holding what were offered as collateralized investments.
Nielsen is expected to sign a formal court order approving the liquidating plan. An 11-day appeal period will follow the signing, with the plan expected to become effective sometime in December.
About 12,000 investors are owed $590 million. If the foundation’s assets sell for the amount that has been projected, collateralized investors will recover about 44 cents for every dollar they invested, while unsecured investors will receive about 31 cents for every dollar invested.
Distributions will be made quarterly until all of the assets are sold, which will probably take three or four years, according to the liquidating plan.
The amount of the initial distribution will be determined in December by a five-member liquidating trust board, in consultation with the liquidating trustee. The liquidating trust will hold the assets of the foundation. The trust board and trustee were appointed during the confirmation hearing on the liquidating plan.
Recoveries from litigation against potentially responsible parties — such as former foundation officers and directors; former lawyers and accountants, including Arthur Andersen LLP; and other individuals and entities — will become part of the liquidating trust and will be distributed to investors after expenses, including attorneys’ fees, are deducted.
The foundation filed for bankruptcy Nov. 9, 1999, several months after the resignation of the president, general counsel and controller and after the foundation entered into a consent decree with the Arizona Corporation Commission to cease and desist from offering securities. Investigations by the Securities Division of the Arizona Corporation Commission and the Arizona attorney general’s office are ongoing.