Met, Summit trusts make fifth payment

Trusts established to try to recoup some of the huge amount of money that investors had tied up in Metropolitan Mortgage & Securities Co. and Summit Securities Inc. before those affiliated companies here shut down nine years ago have made a fifth cash distribution.

Metropolitan creditors received a distribution equal to 1 1/2 cents for each dollar of claim they filed in the Metropolitan bankruptcy, said Maggie Lyons, trustee and plan administrator, in a letter dated Oct. 7 that accompanied the checks. Summit creditors, meanwhile, received the equivalent of 1/2 cent for each dollar of claim they filed in the Summit bankruptcy, the letter said.

The fifth distribution represents a total payment of $5.4 million to Metropolitan beneficiaries and $800,000 to Summit's beneficiaries, it said. Including the latest sum, the cash distributed by the Metropolitan Creditors' Trust to its beneficiaries totals $94.1 million, or 24.8 percent of the Metropolitan claims. Cash distributed by the Summit Creditors' Trust to its beneficiaries totals $24.2 million, or 16 percent of the Summit claims.

The combined total disbursement to date of $118.3 million is up from $112.1 million after the fourth distribution in December 2011. The latest distribution resulted from additional asset sales during 2012 and 2013, Lyons said.in the letter to trust beneficiaries.

"We will continue to make every effort to realize fair value for the remaining assets as quickly as possible and to distribute cash when sufficient funds are available," she said. However, she added, "At this time, it seems unlikely another distribution will be made until 2015 unless there is significant improvement in the economy next year."

The remaining significant assets of the trusts, Lyons said, consist mostly of direct interests in commercial real estate that are difficult to sell in today's anemic economy and indirect interests in real estate owned by former Metropolitan affiliate Old Standard Life Insurance Co. That company still is in liquidation proceedings under the control of the Idaho Director of Insurance, she said.

"OSL faces obstacles in liquidating its real estate that are virtually identical to those that are faced by the trusts," Lyons said, adding, "At this time, it is difficult to estimate a recovery value for OSL due to its significant real estate holdings. The final recovery value for OSL will depend upon improving market conditions for commercial real estate."

Lyons had said in her late 2010 letter to trust beneficiaries that the total Metropolitan and Summit recoveries were projected to be 35 percent and 25 percent of beneficiaries' claims, respectively.

The latest letter didn't update those estimates. Lyons said, though, in an interview with the Journal in the summer of 2011 that she considered the estimates to be conservative, but she emphasized that they depended heavily on how much could be obtained from the sale of close to 30 properties for which buyers were being sought.

"I'm just sorry we're not done with this thing," she said during the interview, noting that many of the affected investors were elderly and that she was receiving copies of an average of seven death certificates each month.

Owned technically by several different entities, the properties at that time ranged from 23 acres of light industrial-zoned land in Airway Heights and nearly 100 acres of commercial land in Everett, Wash., to a ranch in Montana, a castle in Phoenix, and 10 acres of freeway frontage in Granbury, Texas, near Fort Worth.

In all, the Metropolitan and Summit creditors' trusts have disbursed money to more than 12,000 creditors.

Many investors had their life savings wiped out and hundreds of employees lost their jobs when the $2 billion-plus Metropolitan conglomerate, widely regarded for many years as a safe investment option, collapsed. Its demise was a local precursor to the financial industry crisis that swept the country a few years later.

A lot of investors laid the heaviest blame for the corporate failure on former Chairman and CEO C. Paul Sandifur Jr., who spearheaded a sizable expansion of the company that his father founded here in in the 1950s.

The Metropolitan and Summit trusts were established following a bankruptcy reorganization plan confirmation in early 2006. The trusts were scheduled to be terminated in February 2011, but that was based on the assumption that all significant assets would be liquidated by then. The liquidation process has been slowed by a number of factors, including the number and complexity of the real estate holdings and related contracts, as well as the sharp decline in real estate values and demand caused by the Great Recession. For those reasons, the U.S. Bankruptcy Court approved a request five-year extension under which the trusts now will terminate on Feb. 11, 2016.