$2.5-Million Debt Faces Real-Estate Advice Firm

A Westlake Village company founded by real estate author Albert J. Lowry to sell advice on how to make money now has $2.5 million in debts, few assets and the prospect of bankruptcy staring it in the face, company officials acknowledge.

Success Development Institute Inc., which sells tapes and arranges seminars on how to profit from real estate, told its creditors in a letter dated July 1 that it has cash and property worth just $45,500.

The letter asked creditors for a four-month moratorium on all payments.

Despite the company’s presumed money-making expertise, the letter said profits have been scarce lately. For the fiscal year ended March 31, Success Development lost $700,000 on revenue of $19.8 million, down from a $64,000 profit on revenue of $18.6 million in the previous fiscal year.

Lowry, who sold the company three years ago but continued to conduct some seminars for it, could not be reached for comment.

De-Emphasized Seminars

Owner and chairman David Hart said Success Development suffered a cash shortage because of its decision to de-emphasize seminars in favor of selling tapes and other at-home products through television advertising. He also said business had suffered from heavy competition in real-estate investment seminars.

Hart conceded that his company’s straits might affect the credibility of its money-making advice.

“Of course it’s a concern,” he said. “But I think the only way to approach anything is to be straightforward about it.”

In the letter to creditors, Hart said the company was founded in Oakland in 1973 by Lowry, who has been writing books and delivering lectures on real-estate investing for years. He wrote the book, “How You Can Become Financially Independent by Investing in Real Estate.”

The letter said Lowry had agreed to take a more active role in the business, and that his name is its primary asset. The company’s physical assets as of May 31, which were listed in the letter, were nominal, and only $2,500 was in cash.

“Although the company is not owned by Al Lowry, Al has agreed to return to management and full-time promotion on behalf of the company to help assure the repayment of the company’s debts,” the letter said.

Cheryl Wise, one of Success Development’s lawyers, said the letter is an attempt to persuade creditors not to force the company into bankruptcy. The letter said the company owes $2.5 million, but did not name its creditors.

Some of Debt Guaranteed

Wise said “the company’s owners” had personally guaranteed $500,000 of Success Development’s debt. Hart, who described himself as the sole owner, said he had guaranteed some debt, but would not say how much.

Hart said that his company’s creditors could probably force bankruptcy if they choose, but that that they would have little to gain because of Success Development’s meager assets.

Hart’s letter said the company was arranging with the Credit Managers Assn. of Southern California to administer creditors’ claims and distribute payments equitably. The association is a nonprofit corporation that often fills such a role.

Hart also said he had cut his staff from 150 to 20 and given up much of the Westlake Village office space that the company occupied. He also said he hoped to reduce the company’s dependence on selling advice about real estate by including other kinds of self-help products in the company’s line. Until recently, Hart said, 80% of the company’s revenue came from two-day real estate seminars priced at $495 for an individual and $795 for a couple.