I see Dan - we are on 2 different subjects. You are talking about
priority of liens for a payoff (and you are right). Although I
think you are taking some liberties with the word "equity
investor." Equity presupposes you own the property. Banks with
mortgages don't own the property, they have a security interest -
not an equity interest. So too for individuals holding a promissory
note.
I'm talking about control of the properties until the time of the
payoffs. I assume it will be a receiver, who ultimately will sell
the properties to start paying off the creditors. The batting order
is usually 1st in time holders of a security interest (mortgages,
liens, etc) followed by the unsecured creditors (those last ones
often don't get paid off when there isn't enough to go around, and
are left only with a restitution order from a criminal court).
I'm not certain to what extent banks are even going to be involved
here. The paper says Klein personally guaranteed $8 million in
promissory notes. You can but a lot of AP property with $8 million.
--- In AsburyPark@yahoogroups.com, "dfsavgny" <[EMAIL PROTECTED]> wrote:
>
> --- In AsburyPark@yahoogroups.com, "bluebishop82" <bluebishop82@>
> wrote:
> >
> > After freezing the assets, the state is likely to appoint a
> receiver
> > who will hold and maintain the properties in trust for the
> defrauded.
> > His powers will likely include the power to sell.
> >
> > From reading the press article, it isn't clear yet if there are
> equity
> > investors. The article said REI was selling promissory notes,
> which
> > standing alone gives no equity or security interest.
> >
> Equity investors in the sense that there is debt on the properties
> (banks). Whatever value there is (if any) after the debt repayment
> is the equity. I assume the investors who were allegedly defrauded
> own whatever equity there is in the properties above the debt.
> Forget the state. The banks come first. They ask for a receiver or
> simply call the loans and foreclose. State can only act on behalf
of
> the investors (equity) and have to wait until the lenders have
eaten
> their full.
>
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