We want the creditors to get their money back!
Padrick’s Presentation to the Summit Principals – Part 6
Kevin: But we’re happy to ask questions.
Mark: Starts to speak. Mark in interrupted by Kevin Padrick
Kevin: Bbbb, let me, let me go through, happy to ask questions # 1 okay. Um, # 2 we have to have some independent verification of answers.
Mark: I understand that.
Kevin: That’s good, —————— please?
Mark: Okay.
Kevin: So were happy to ask questions, independent verification of answers.
Tim: What about the trustees? Does that affect Sussman and Shank’s role? Are they less involved now that the trustee really has the ability to move forward and do what they have to do? I don’t really understand, does it affect their role to move forward?
Kevin: Um, it…it as a practical matter it doesn’t probably…um, as a legal matter, the trustee can select whoever the trustee wants, so.
Brian: Listening to what I’ve heard so far, it sounds like we’re frustrated with this process, you guys are frustrated with this process and um of course the big part of it is not here, Sussman and Shank, need to get some of the blame and stuff at least inside me um- with this past process with the trustee appointed, will, does Sussman and Shank, will their role go down, which I think would be a good thing, but, I mean.
Kevin: We need to get legal work done no matter what, right? They clearly are the most knowledgeable firm. They are and um once part of this problem, because of the intense distrust of the creditors, you get a lot of duplication, it doesn’t matter, and um…and I think once we get the trustee in place, I think everybody will stop the duplication because then the creditors will feel like, okay, they got their guy in place, they don’t need to duplicate, um…and that’s part of the role of the trustee is to say, you know, okay, creditor’s attorney, you research this issue, Sussman and Shank, you research this issue um……and we move forward on this, this and this…..so.
Stephanie: It seems to me that they’re going to appoint a trustee and then the trustee, I mean, if it’s you, then when does the settlement of interest happen?
Kevin: Well, that’s dependent on the four principals deciding that they want to do it o don’t. Other than a court, no one can force you to do anything.
Mark: Is there, so, is there a…I mean does it make sense that we say, here are these assets we’re ready to gin right now.
Kevin: No, it’s not, sorry.
Mark: Okay, here are these assets we’re ready to transfer or whatever or sign or whatever and then we have these others we’re really, really concerned about. We want some kind of different agreement to get those? I mean, is that unreasonable?
Kevin: I…I…I’m not saying it’s unreasonable but Mark, you’ve asked me the same question five different times, and my answer is the same. You’re asking for an answer I’m telling ya, people are literally researching that question today.
Stephanie: But you also just said that until there
Mark: I’m just saying quit researching it. I’ll agree to get this over to you, let’s do this in a different way. This is a personal, this is an asset that has nothing to do with Inland, I will give it to the bankruptcy estate, this is how I want to do it, in a way that doesn’t endanger them. I don’t need the attorneys to tell me, oh, well we’re going to take this risk or whatever, this is me and I’m subjecting you know, so I’m asking you, are the attorneys going to say, you have to do it, you don’t have a choice?
Kevin: They might! They might say, if you want the cooperation of the creditors, this is what you need to do. They can’t say to you, you have to do it, only a judge can say you have to do it. But they can say, if you want the cooperation of the creditors, this is what we want you to do. That’s why they want to research it, so they can figure out what they, what exactly they want you to do, and, and, asking me again and again isn’t gong to help because I don’t have an answer for you today on that issue, it’s been raised. The initial reaction was let’s put all the assets in and take the risk. That was the initial reaction, then Dave Foriker and others said, come on guys, think about this. Let’s, let’s, make sure this is the right way to go and so people said okay you’re right, we should go back and revisit this and that’s what they are doing, they are revisiting that exact issue. But I can’t tell you Mark, I understand your agreement, it’s a good idea, it’s a creative idea, but I can’t tell you whether that’s people are going to agree to that or not, cause I don’t know. I don’t control the creditors. I don’t know what they’ll agree to.
Jan: But if you could voice your opinion on that……
Mark: If you have influence with the creditors, I mean…..
Jan: That’s right…
Kevin: Laughing: I influenced them by saying you gotta go research this. Don’t just do it this one way, let’s go research the issue. Let’s, let’s you know, let’s figure out if there is another way to do this, and then we talked about all the different ideas which I’ve gone through.
Stephanie: And what about you presenting this idea to the creditors?
Mark: He says he already has.
Kevin: I just did.
Stephanie: Oh, this one with him signing Summit’s?
Kevin: No, I didn’t submit exactly that idea…
Mark: Just, just, there’s problems with blanket assignments, just assigning everything cause there’s issues there. You told the creditors that?
Kevin: Yes, and not only that, I told them what about doing it with a, with a um, sign of economic interest with a power of attorney, what about doing it with a sign of economic interest and a cooperation agreement you’re purposing something kind of like my third offer.
Mark: Right, right, that’s kind of it.
Kevin: It’s kind of a third offer and, and, I said, analyze these ideas.
Tim: And they wouldn’t make sense if some assets go one way and some go another because of this?
Kevin: It might.
Mark: Can you, can you keep a just a court order in place on the specific assets on transferring those assets, like the court order s there under this agreement or cooperation or whatever so they have assurance that, you know, there is a court order given assurance it’s not going anywhere.
Kevin: Um…you’re asking me to interpret the court order (laughing).
Mark: I, I don’t know.
Kevin: I mean, I don’t know.
Mark: I’m asking, I’m do you think the creditors would look at that as a strong enough thing to give them assurance that…
Kevin: I don’t think so, I don’t thing that existing court order is enough to give them that assurance. I am told that some of those creditors are going to pursue their actions you know, assuming unless the assignment is done, but again, not my decision. I’m just telling you what they tell me. And I said, let’s think about these other ideas, as a way of still getting everybody in the same page
Stephanie: Could you um…email me the three ideas that you have, just word by word so we understand what they are, or are able to know, are able to talk to the attorneys that we have to deal with in order to.
Kevin: I, I’m, I tried calling Dave ??? on the way down and couldn’t call him because I had three other phone calls at the same time. I’m going to call him on the way back because he’s asked me to specifically call him and talk to him not only about this issue but about all the ideas you have.
Brian: It’s just I mean I know this is the true source but one specific one ???? told me for Brian and I could sign… Mark could sign an interest for the mortgage owner to take the property back. It’s just an example and that’s one that’s kinda and Stephanie’s involved in that and there’s lots of people get hurt and it’s just an example.
Mark: Well it’s not one that we’re
Stephanie: It’s not one where there’s any value because um
Mark: Well we’re, we have it listed and I mean we’re, we got it out there it’s listed at a price that we’ll get some money to the creditors if we can find some, I mean We kinda want to leave it out there listed and the only way to make the claim work for now is that we’re going to have to do the management and without a manager I mean you’ve got to pay the manager…, you can feed that type of money all you want. So I mean it’s just a real specific one that we want to try to, we want to try to get some value out of it if we possibly can and so.
Tim: Well we are getting… and that’s just an example of there, there’s a property that’s screwed up and set down as you guys as your evaluation have talked about that what we know about the property and what work we’ve done on it because that is, we’re talking about Century drive mobile home park, ten acres of RH property in Westside Bend.
Stephanie: It’s RN
Tim: It’s RN… but the point is that may be one who at the discount rate may be very well one to say ok we’re going to come in and we’ll do, agree to this trust and we’ll fund this as is necessary but we don’t, we don’t want to sell this as ???, we want to well this in I don’t mean don’t. But there’s a huge upside on that property. One is our current situation change. It’s just, but right now, there’s probably no value in that property, and so it’s just one of those. We just want to make sure that there will be, I want to make sure that there’s…
Mark: We don’t care about our, we want all our interest to go to the creditors
Tim: Right
Mark: And, ah, but there’s also some other people in there that could potentially, if we sign and put in???, we would just screw them over.
Ryan: These are conversations we know we have to have but when you asked why I haven’t asked you questions or why Ewan hasn’t been asking you questions it’s cause we haven’t been in a position to do that. We’ve been looking through all the files, we haven’t, I mean that’s what Kevin’s saying things are changed a little bit but more on that position as a trustee or whatever else. I have tons of questions for you, but we’re not in a position to make decisions on any of the properties. So if I do ask you why you ask questions, I mean I’ll answer those questions for you, but I wasn’t in a position to specifically go property by property and ask you those questions. I have a laundry list of questions on every single one of those. And that’s what we want to do. We just haven’t been in that spot to do it yet. It’s not a matter of not wanting to ask you, I mean we know that the people in this room can explain that file better than anyone else or whoever else is involved.
Mark: Well, that’s not necessarily true either….
Ryan: Well right…
Mark: Oh these guys think they own this and if you discover it’s not, you know,
Ryan: Right
Mark: It’s not surprising it’s a normal thing, but it’s not, it’s um, gah, you know, what we’re saying is there are a number of things that we have ownership interest or properties that we are really concerned not only about the partners getting screwed, but about getting the most value, and if I could hear, I want to hear that someone’s going we know that, we need to figure out solutions that would work with it instead. It’s just this general assignment just do it is to me a scary thing. I don’t know that it’s the best for the creditors.
Kevin: I know that Mark
Mark: You guys got to do a property by property analysis and go there’s these properties that…
Kevin: until we have the operating agreements we can’t, we can’t read something we don’t have.
Mark: Right. Well I know you have some of them
Kevin: We’ve got some of them but we don’t have, you’d be surprised at how many we don’t have.
Stephanie: So am I hearing that, um, with all the information, you guys will do the do diligence work, um
Kevin: We have to, its our job
Stephanie: Right, ok. And then, you know your guys’ intention here is to get the most back to the creditors but,
Kevin: Not only that, it’s our economic incentive.
Stephanie: Right, right, and then the only concern I have is this mobile home park, there was a 74 year old man who has to go back and work at this park and he did an exchange and exchanged into this park and the money from that exchange went to Inland, so that’s why we’re hurting so bad on this park and he has nothing. If, if that one goes into default and we’re not able to get it, he will lose the 900,000 he put in there, and that was his wealth.
Mark: I mean, that’s a real personal thing for us to go, transfer funds in by default and, will let this guy just suffer the consequences. It’s not morally right for-
Kevin: I hear you. I don’t know how to say it. I hear you. I’m going to talk to David for you. He’s got some ideas to discuss with me, I’ve got some ideas to discuss with him, he’s got some other things he wants to talk about. I’m happy to do that.
Stephanie: Is there a way that you could communicate what your um, what your discussions are around those items with us afterwards?
Kevin: You mean the property?
Stephanie: Or just with a blanket assignment versus getting almost everything assigned except for one problem property.
Kevin: Yes, I’m happy to do that, and we just need to make sure your attorneys are comfortable with me doing that. They have to actually be comfortable with that.
Mark: The other one is Smith Brothers. Dennis, don’t underestimate him. He will hire attorneys, he’ll fight you like hell. I mean, and that one just says you can’t just specifically assign it. You know, he doesn’t even know what he’s going to talk about with anyone else
Kevin: Kay.
Mark: He will fight like hell and it’s going to cost a whole bunch of money and, you know, the way to, the way to resolve with Dennis is just to work with him, and figure out a solution, and you’ll get, and that has a whole bunch of value there. You know, you can argue about the business and the value of the business, but, if you can’t do a deal with him and get to do lease on that building, that’s where you just lost a whole bunch of money.
Kevin: Kay
Mark: Ok. He’s a neat guy. He’s getting money to the creditors, and I just think he’s one of the guys you’d be better being careful about. He is nervous. I mean he wants to move on now.
Tim: well I forwarded his email to Kevin the other day
Kevin: I forwarded it to Brian
Ewan: And you had also told us that you have a packet from him, or a business evaluation.
Mark: Right
Ewan: I’d like to see that
Mark: yeah but I mean those are two, and I haven’t sat there and spent time looking at the other things but those two right off the bat make me incredibly nervous, and so.
Brian: It sounds like Obsidian really doesn’t have the authority yet.
Kevin: We can’t
Brian: To negotiate or do that and
Stephanie: And once you’re a trustee
Kevin: We won’t until we get the assignments. It’s a two step process
Stephanie: You won’t get to be a trustee and then slowly get the assignments
Brian: Hopefully the attorneys are going to say assignment of… rather than the actual assignments. We’re hoping that that’s going to work out but we don’t know till we hear back from the attorneys.
Kevin: Right, but, like I said, I intend to call them today and say where are we on this issue?
Stephanie: I think that’s one of the biggest issues, obviously
Kevin: I’ve only asked, now I think seven times. I’ve got
Mark: Kevin, so
Kevin: I’ve got a phone call in three minutes just so you know.
Mark: Ok I just want a real precise answer. Just looking at this and what you know about it, how long do you think, you know, depending on what they come back with if they come back with a reasonable discount rate, how long do you think this liquidation should take to get the value?
Kevin: Give me the discount rate
Mark: Let’s say it’s 4 percent
Kevin: Ok, I think your discount rate and their discount rate are different. I think their discount rate will be higher.
Mark: let’s say it’s 15 percent
Kevin: If it was 15
Mark: right
Kevin: my gut feel is three years
Mark: ok so you don’t think the best yield is liquidating all the stuff right away. You don’t think that’s going to be the best
Kevin: at 15 percent discount
Mark: I know at 15 percent discount
Kevin: right. If you told me it was at 45, I’d say that’s a different situation. And at 4 percent, it might take five years
Mark: ok, cause my concern all along is that all you’re going to do, cause this is all I’ve ever heard, is that you’re just going to liquidate these assets. I mean I hadn’t heard anything different from anybody else, and I haven’t, I haven’t seen you performing.
Kevin: look, these guys have spent 4 years?
Ryan: 5 years
Kevin: 5 years. Got 180 dollars more. It’s great, but you can’t-you say you don’t want to believe me, I don’t want, I mean, I can’t just tell you what we do. You know, we don’t, we take a tremendous amount of pride in what we do, ok, because when we’re done, we want people to say that was a damn good job, not they screwed us over, we didn’t get a damn thing. You know, that doesn’t help. So I mean, we’ve only had people be happy before, even when we’re done. They may not be happy in the interim, but when we’re done. You know, I mean, we do the best job we can do, and we do a good job. You know, I don’t know how else to do it Mark, other than to just tell you the answer to the specific question how do I think about the discount rate, how long is this going to take. I can answer those questions for you
Mark: No, you answered my question, I mean
Kevin: do we think we’re blowing it out? No we don’t think we’re blowing it out. In fact, if we were just blowing it out, you wouldn’t need us.
Mark: well that’s…
Kevin: that’s not what we do
Mark: I haven’t been told anything other than that’s how you work with this stuff
Kevin: well I don’t know who’s told you that
Stephanie: so is there a way that we can, um we could get the attorneys to pass a way so you could communicate directly to us? Communication’s critical
Brian: well it sounds like he can, sounds like Ryan whenever he has a question, he’s not going to go through Susan, who’s going to go through my attorney, who’s going to
Ryan: Well it’s kinda why I’ve been asking Susan a question. I haven’t been asking you questions cause I’m not in any position to do that. That’s just all there is to it.
Kevin: But we still need to clear it through your attorneys. We just have to ask, we just have to do that. Because if they thought that we would learn something that could hurt you, they would be concerned about that
Stephanie: So do you have to ask for that, or do we have to ask for that?
Kevin: you do
Brian: Shoot I’m doing that right now, cause that’s locking communication and I need a different attorney, so. I mean I’ll communicate with mine
Kevin: I understand. I’m not saying your attorney said don’t communicate with me
Brian: right ok
Kevin: That’s not what I said. I said Kevin said that you need to ask before he can start asking you questions about the properties. That’s what you can say cause that’s the case.