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News Now

CU System
Former Centrix owner appeals liquidation order
DENVER (6/11/08)--The former owner of Centrix Financial LLC--a subprime auto lending service that serviced credit unions and that is in Chapter 11 bankruptcy--has filed a notice of appeal of a liquidation plan approved earlier this year by the U.S. Bankruptcy Court. Robert E. Sutton, the former owner, and two entities--6762 S. Potomac LLC and Centrix Consolidated LLC--filed papers stating the issues on appeal Friday through attorney G.W. Merrick in the U.S. Bankruptcy Court for the District of Colorado. The appeal seeks to address whether the U.S. Bankruptcy Court erred in several rulings it made, including a ruling confirming the Chapter 11 reorganization, according to court documents obtained by News Now. Judge Elizabeth E. Brown had approved the reorganization plan on April 21, after almost two years of court maneuverings in the case by a growing list of participants. The notice of appeal also takes issue with the court ordering the appellants to cease-and-desist from filing claims objections and the court's overruling of Sutton's objections to the liquidation confirmation. The reorganization would have involved Centrix and its seven affiliates under bankrupty protection to consolidate into a single entity, with Centrix assuming all the affiliates' assets and liabilities. It would pool the resources to pay each affiliate's creditors (News Now Jan. 22). Credit unions and other entities have claimed millions against the company's assets. More than two-thirds of Centrix's portfolio is owned by roughly 230 credit unions throughout the nation. It underwrote more than 250,000 loans totaling $4 billion (News Now Sept. 6, 2002). The reorganization was considered the best opportunity for creditors-- including credit unions--to secure any money that might be handed out through the liquidation process (News Now April 25). Sutton's appeal would delay the distribution process of any funds. Centrix was placed under involuntary Chapter 11 protection on Sept. 15, 2006 by creditors IFC Credit Corp., Suntrust Leasing and Wells Fargo Equipment Finance Inc. They said Centrix owed them a combined $4.6 million in lease payments. Several days later Centrix and its affiliates filed voluntary petitions for Chapter 11 protection.


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