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HDG Mansur owner files Chapter 11 bankruptcy

October 6, 2014

The owner of troubled Indianapolis developer HDG Mansur has filed bankruptcy, just as a trial was set to begin Monday over a $5.8 million judgment.

Harold Garrison is seeking to reorganize under the protection of Chapter 11, according to a Friday filing in U.S. Bankruptcy Court in Indianapolis.

The filing estimates Garrison’s assets to be between $50 million and $100 million and his liabilities between $100 million and $500 million.

Garrison’s reorganization prevents two equity funds—GPIF Equity Co. Ltd. and GPIF Finance Co. Ltd.—from collecting the $5.8 million a federal judge in New York awarded them in August 2013. A countersuit delayed the award, pending a related trial that was set to begin Monday. Garrison and two HDG Mansur affiliates were listed as defendants.

Garrison's bankruptcy effectively stays the trial, according to a filing by his attorney.

“Accordingly, all creditors, including the plaintiffs, are stayed from the commencement or continuation of judicial, administrative or other actions or proceedings against the debtor, the enforcement of judgments against the debtor, or property of the debtor,” Garrison's attorney, Francis J. Earley of New York, wrote in a filing.

The trial in New York has been continued with no further action yet scheduled, according to court officials.

Reached by phone, Earley declined to comment on the bankruptcy.

Garrison is well known in the local real estate market and helped develop some of downtown’s biggest projects, including the Omni Severin Hotel, Lockerbie Marketplace and Market Tower, which now is in foreclosure.

The litigation stems from two affiliates of HDG Mansur—HDG Mansur Investment Services Inc. and HDGM Advisory Services LLC—which provided advisory services to the pair of Cayman Islands-based equity funds.

The equity funds sued the Mansur affiliates, accusing them of misappropriating $5.8 million in assets. The judge awarded the damages in August 2013 while rejecting HDG Mansur’s argument that it charged the additional fees to rectify a billing error.  

In turn, HDG Mansur countersued the two funds, claiming they owed the local firm more than $20 million in fees. The trial, set for Monday, would have decided the countersuit.

Garrison’s bid to reorganize his assets follows a similar action from the two Mansur affiliates, which filed for Chapter 11 bankruptcy in May.

Two creditors of the affiliates, KFH Capital Investment Co. and Kuwait Finance House Real Estate Co., in August asked the bankruptcy court to convert the case to a Chapter 7 liquidation. They claim HDG Mansur has no hope of reorganizing and is using Chapter 11 as a stall tactic to avoid paying the $5.8 million.

The creditors say HDG Mansur owes them nearly $100 million from a real estate investment in Bristol, England, and say the Chapter 11 filing is an attempt to “stave off enforcement of creditors’ claims and to shield their owner, Harold D. Garrison, from liability to creditors.”

The two Mansur affiliates oppose converting the case to a liquidation, saying in court papers filed Sept. 11 that significant progress has been made toward a plan and global settlement of claims.

At a Sept. 16 hearing, a bankruptcy judge in Indianapolis, for the time being, denied a request to appoint a Chapter 11 trustee or convert the case to a liquidation in Chapter 7, according to court records.
 

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