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Rare Decision In Fallen Auto Tycoon's Bankruptcy

Posted By admin || 25-Jun-2010

Rare Decision In Fallen Auto Tycoon's BankruptcyIn a move that is rarely seen in bankruptcy, bankruptcy trustee Randy Seaver, forced one of Denny Hecker's holding companies into bankruptcy, saying that Chrysler Financial was the legitimate creditor not Cornerstone Bank.

In filing the bankruptcy for Seaver, attorney Matthew Burton said: "Technically Cornerstone Bank is not a creditor. They never lent money to this entity." Instead, Hecker, who turns 58 Sunday, used the property to guarantee various fleet financing loans he had with Chrysler Financial. Those loans are all in default.

When Hecker filed for bankruptcy in 2009 he listed $767 million in liabilities owed to Chrysler Financial and many other creditors.  Hecker also listed Jacob Holdings of Stillwater (the company now forced into bankruptcy) as a parcel of land and that he had forfeited the deed in lieu of foreclosure to Cornerstone Bank.

The bankruptcy trustee has insisted that any claim against the property by Cornerstone Bank will be strongly challenged and made it clear that he did not think that the creditor had a valid claim, especially not before Chrysler Financial.  After a new bankruptcy trustee is appointed for the Jacob Holdings company's involuntary bankruptcy filing, Cornerstone's claim to the deed of the property will most likely be voided.   Hecker's bankruptcy attorney was completely taken by surprise when the bankruptcy trustee forced the holding company into bankruptcy, saying that she had never seen anything like it before it is not clear if the bankruptcy attorney will challenge the decision.  Comment was not heard from Hecker who has since abandoned his fight in bankruptcy court now that he is being accused of criminal charges of bankruptcy fraud, wire fraud, conspiracy and money laundering.  All charges which could send him to prison for at least five years if found guilty. Hecker has pleaded not guilty to all charges.

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