Butterfield Equities Corp. Files for Protection From Creditors

Butterfield Equities Corp., the one-time holding company for Butterfield Savings & Loan Assn. in Santa Ana, has filed a petition for reorganization in U.S. Bankruptcy Court listing debts totaling about $88 million and no assets.

Most of the debt--$85.5 million--is the amount the Federal Savings and Loan Insurance Corp. is seeking in a lawsuit against Butterfield Equities and five of its owners and officers, including Donald W. Endresen, president of Butterfield Equities and former head of the S&L.;

The FSLIC was appointed receiver of the S&L; when regulators declared it insolvent and seized it in August, 1985. Butterfield Equities was not part of the takeover, but it had few assets outside of the S&L;’s then $830 million in assets.

The filing will likely stall the lawsuit against Butterfield Equities, said Peter J. Diedrich, a Los Angeles attorney for the FSLIC. But it will not stop the FSLIC from pursuing Endresen and the other individuals on claims of fraud, conspiracy to defraud and breaches of fiduciary duties, Diedrich said.

“I have a lot of plans for Butterfield Equities, but they’re contingent on the company coming out of bankruptcy court pretty much intact,” Endresen said.

The largest unsecured creditor listed in the bankruptcy petition is Daniel L. Kiernan in Fullerton, who is owed $398,657. Kiernan is a former BEC executive and one of the co-founders of the company’s predecessor firm, KECOR Financial Group Inc., a real estate syndication business.

Kiernan would not comment on the nature of his claim.

The bankruptcy petition came as little surprise. Endresen all but predicted it in a letter he sent to about 3,800 BEC shareholders in October.

In the letter, he said the company was a mere shell fighting the FSLIC over ownership of assets he estimated at $3 million to $5 million. His letter attacked regulators, claiming that they used their “unchecked power” and “finely honed intimidation tactics” to engage in a “systematic program of harassment.”

Endresen previously had estimated the value of BEC stock at 10 cents to 25 cents a share, or a total of $320,000 to $800,000. Its most significant asset, he figured then, was a tax loss worth at least $30 million, which could be used to generate capital for a new business.

He had been trying to keep the company afloat, moving it recently to Santa Ana from Anaheim, but he said he finally had to turn to Bankruptcy Court for protection from creditors.

Butterfield S&L; continues to operate as a newly chartered federal savings and loan.