Brother’s Bankruptcy Could Affect Another Bangerter-Held Firm

One of three millionaire brothers who ran Knudsen Foods until its collapse last fall is having financial problems that may affect another sizable family-controlled firm, Care Enterprises.

Dee Roy Bangerter, a major shareholder in the nursing home firm, has filed for protection from his creditors under Chapter 11 of the federal bankruptcy code. In his Jan. 7 bankruptcy petition, Bangerter says his Care Enterprises stock is worth about $6.3 million, making it his largest asset.

Care Enterprises, based in Laguna Hills, is the nation’s fourth largest nursing home operator. Bangerter and each of his two brothers hold a 22% interest in Care, whose shares are traded on the American Stock Exchange.

The bankruptcy filing could result in a power shift at Care Enterprises if Bangerter is forced to sell his holdings to pay his creditors. The three brothers have been feuding over the way Care is being run and last summer one of them--Ted D. Nelson, Bangerter’s half-brother--quit Care’s board of directors.

In that public dispute, Dee Roy Bangerter and his twin brother Lee Roy--who is chairman of the Care board--succeeded in putting anti-takeover measures into place over Nelson’s objections. Those familiar with the situation say the relationship among the brothers soured as Knudsen’s woes deepened last fall and as Nelson and Dee Roy Bangerter jockeyed for control of Knudsen’s parent firm, Winn Enterprises.

Wife Seeking Stock

In addition, Dee Roy Bangerter has another party seeking his stock in Care Enterprises. His wife, Janice Bangerter, is seeking a divorce and is asking for half of her husband’s Care Enterprises shares.

Janice Bangerter’s lawyer, Walter Howald, said Bangerter’s stock is his most valuable asset and that he is concerned that Bangerter’s creditors may make competing claims for the stock. Howald said he believes the bankruptcy filing was intended to halt the divorce action while Bangerter reorganized his holdings. Janice Bangerter couldn’t be reached.

Neither of the Bangerter brothers returned telephone calls requesting their comments. Nelson also couldn’t be reached, and other Care executives did not return telephone calls.

Nelson and the Bangerter twins initially built their fortune on Care Enterprises, starting with a single nursing home in Anaheim. The company has grown largely through acquisitions financed by heavy borrowings that have hurt its profitability over the last several years.

Since the company went public in 1983, it has grown from 40 facilities to 124 in seven states. Though its revenue has grown, its profit hasn’t. It reported a loss of $772,000 on revenue of $197.1 million for the nine months ended Sept. 30, 1986.

In trading Wednesday on the American Stock Exchange, Care Enterprises class B shares closed unchanged at $5 and its class A shares closed at $4.50, up 12 1/2 cents. At those prices, Bangerter’s shares are worth about $8.8 million.

Bangerter’s financial difficulties appear to be related in part to the demise of Knudsen, the largest dairy products company in the West until it filed for protection from its creditors under Chapter 11 of the federal bankruptcy code. Bangerter says in his bankruptcy petition that he may be liable for $10 million in potential claims resulting from the Knudsen bankruptcy.

In his bankruptcy petition, Bangerter lists property worth $9.6 million and debts worth $48.3 million. However, the filing indicates that Bangerter is fighting many of those claims, most of which stem from lawsuits involving his real estate investments. According to his bankruptcy petition, about $44.2 million of those debts are in dispute.

9-Bedroom Home

Among his largest unsecured creditors are Wells Fargo Bank, which is owed $1.07 million, and First Interstate Bank of California, which is owed $525,767. First Interstate recently sued Bangerter to recover the loan, but the suit was frozen by the bankruptcy.

Other than his stock, Bangerter said in his bankruptcy filing that his largest asset is his home, a nine-bedroom, seven-bath, custom-built mansion in exclusive Villa Park. The filing says it is worth $1.8 million. The two-year-old home, which contains a racquetball court, an Olympic-sized pool and a tanning room, is listed for sale at $2.9 million.

Bangerter and his brothers bought Knudsen in 1983 for $74.8 million and borrowed heavily to purchase arch-rival Foremost Dairies in 1985 for $50.1 million. Swollen with $266.2 million in debt, the company quickly ran short of cash and is now selling off its holdings under bankruptcy court protection.

Most of its California operations were sold to Kraft and Hughes Markets, which continue to sell products under the Knudsen name.