The 1031 Tax Group, LLC and 16 its affiliates filed for Chapter 11 protection with the U.S. Bankruptcy Court for the Southern District of New York in order to obtain necessary time to reorganize their affairs.
The Debtors cited liquidity issues in the decision to file, including the actions taken by several financial institutions in blocking access to 1031 Tax Group's funds.
The Debtors estimate on a balance sheet basis that their assets exceed their obligations to customers and others. Prior to the filing, the owner of 1031 Tax Group, Edward H. Okun, personally signed a guaranty for repayment of notes owed to the Debtors by entities controlled by him. Mr. Okun has agreed in principal to collateralize his personal guarantee with a collateral package in order to facilitate repayment of creditors' claims. The Debtors anticipate that the proposed collateral package will be agreed to and documented within a short period of time.
Paul Traub, Esq. and Norman N. Kinel, Esq., co-chairs of Dreier LLP's Bankruptcy & Corporate Reorganization Department, represent the Debtors in their restructuring efforts.
In addition, the Debtors have named James M. Lukenda of Huron Consulting Group as Chief Restructuring Officer. The Huron team led by Mr. Lukenda replaces five 1031 TG executives who recently left the company.
"Huron is moving forward with the full support of The 1031 Tax
Group to address the companies' business and liquidity issues in an orderly way," stated Mr. Lukenda.
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