More HomeGold assets added to creditors fund

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The judge authorized the sale of most of HomeGold's residual interests in mortgages the company wrote and marketed as part of its subprime lending business. The residuals are the largest asset remaining in either company, according to Ralph McCullough, the Columbia attorney appointed to liquidate the companies.

William F. Perkins, the court-appointed examiner of the companies' records and operations, had estimated that creditors could expect to share no more than $20 million under a liquidation plan. That would mean a payback of less than 8 cents on the dollar.

The only remaining potential larger source of money, McCullough said, is civil law suits he expects to bring against some former officers and executives of the two companies.

Under the liquidation plan approved by Judge Bishop in October, McCullough is to collect money due the two companies and pay their operating costs, including legal fees, and distribute what remains to the creditors.

The residuals had a face value of $48 million.

McCullough has scheduled a public meeting Nov. 18 to apprise investors and other creditors of the status of the bankruptcies and other court cases.

At least four civil suits are pending against the companies and various former officers and directors, but they are expected to be superseded by ones that McCullough, as liquidation plan trustee, said he will bring.

The Nov. 18 meeting is scheduled to be held at the Palmetto Expo Center in Greenville, starting at 1 p.m.

Carolina Investors and HomeGold Financial filed for bankruptcy last spring owing an estimated $278 million to more than 8,000 creditors, most of them small investors living in the Upstate.

HomeGold is a publicly held company originally from Greenville, while the Pickens-based Carolina Investors is HomeGold's privately owned subsidiary.

The judge on Friday authorized Ralph McCullough, the Columbia attorney appointed to liquidate the companies, to sell HomeGold's residual interests in its largest mortgage pool to Credit-Based Asset Servicing and Securitization LLC, a New York company that invests in subprime mortgages.

Credit-Based Asset won the rights in an auction this week in Charlotte by besting Greystone & Co. Inc. of New York, the only other bidder.

Bidding started at $12 million, with the final bid reaching $14.925 million.

Added to that sum, though, will be $6.5 million due HomeGold in uncollected fees for previously managing the mortgage pool, $1.2 million in advances for services to the pool until the sale is completed, and $520,000 in other fees.