- 12 -
2. The Bankruptcy of Dondi Financial
Dondi Financial filed for bankruptcy on May 9, 1987.
Petitioner filed a claim against Dondi Financial for $577,626.
This amount was the difference between the repurchase price of
his stock and the balance on the note. The bankruptcy trustee
(trustee) sued petitioner for $659,118 plus interest on
petitioner's note. These suits were settled on June 22, 1990.
Petitioner paid the bankruptcy estate $2,500 and withdrew his
suit. The trustee also withdrew his suit.
Philip Palmer (Palmer) was the attorney for Dondi
Financial's bankruptcy trustee. Palmer examined Dondi
Financial's books and records during his investigation of Dondi
Financial. Palmer saw Vernon's financial statements, including
those which had been certified by audit and others that had been
prepared by Government regulatory authorities for each year
before the bankruptcy, monthly reports from 1984 to 1986, and
regulatory reports. Palmer used these documents to estimate
Vernon's fair market value from about 1982 to 1986. Palmer took
into account the fair market value of Vernon and about three of
its small subsidiaries in estimating when Dondi Financial became
insolvent. Palmer focused on Vernon's commercial and residential
loans because Vernon's and Dondi Financial's insolvency resulted
from the improper granting and reporting of these loans.
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011