A bankruptcy court judge today placed local businessman Tim Durham’s Fair Finance Co. into involuntary bankruptcy—a
move that will give a federal trustee control over its remaining assets.
The move provides peace of mind to Ohio residents who invested in the business and feared their money might disappear while federal securities-fraud investigations continue.
“My message is help is on the way,” said David Mucklow, an Ohio bankruptcy attorney who filed the petition for involuntary Chapter 7 bankruptcy Feb. 8 on behalf of some of the company’s investors.
Attorneys for Akron, Ohio-based Fair Finance had opposed the effort to force the company into bankruptcy. However, in a separate investor lawsuit in an Ohio state court, they had consented to appointment of a receiver. In that suit, they denied fraud occurred but said receivership made sense to provide “some order and structure” amid “wild speculation and reckless accusations.”
Friday’s ruling by bankruptcy court Judge Marilyn Shea-Stonum of the U.S. Bankruptcy Court for the Northern District of Ohio automatically puts the receivership litigation on hold, Mucklow said.
Muckow believes bankruptcy was the better option for investors all along because the federal trustee will have “much greater power” than a receiver would to pursue assets held by Durham-affiliated companies across the country.
Attorneys representing Fair Finance were not immediately available for comment Friday afternoon.
Fair’s offices have been closed since Nov. 24, when FBI agents raided its headquarters in Akron and Durham’s office on the top floor of the Chase Tower in downtown Indianapolis.
The raid came a month after IBJ reported that Durham and fellow Indianapolis businessman Jim Cochran had used Fair almost like a personal bank since buying it in 2002.
The story said the pair, their associates and companies they owned rung up more than $168 million in insider loans—debt that might imperil Fair’s ability to repay the Ohio investors who purchased more than $200 million of the company's investment certificates.
Court papers say the trustee overseeing Fair will be Brian Bash, a partner with the law firm Baker Hostetler in Cleveland.