Firm Tied to Defunct S&L; Seeks Creditor Protection
A sister company of Costa Mesa-based American Diversified Savings Bank has sought protection from creditors under Chapter 11 of the federal Bankruptcy Code, according to court documents.
In filing for protection earlier this month in U.S. Bankruptcy Court in Santa Ana, American Diversified Equity Corp., a securities firm owned by the bank’s former chairman, Ranbir S. Sahni, is claiming $147,413 in total liabilities and assets worth an estimated $700,000 in contingency funds.
The assets are contingent on whether Sahni can win a $50-million lawsuit against a federal regulatory agency that seized the bank early last year. Sahni’s suit against the Federal Savings and Loan Insurance Corp., which took over American Diversified Savings on Feb. 14, 1986, claims that federal regulators have mismanaged the bank’s assets since the takeover, said Robert L. Kinkle, an attorney representing the securities firm.
The bankruptcy documents list American Diversified Equity’s largest unsecured creditor, owed $24,759, as Great Western Union Federal Savings & Loan Assn. of Bellevue, Wash.
Kinkle said the securities company had a contract with American Diversified Investment Corp., an investment firm owned by the savings bank, that “provided for certain expenses.”
“After the takeover, there was a failure in carrying out the contract,” Kinkle said, adding that American Diversified Equity “did all its work” for the investment company.
When the FSLIC seized American Diversified Savings, officials said the bank’s loans and investments were substandard and filed a $76-million lawsuit charging Sahni, a one-time Indian air force pilot and naturalized U.S. citizen, with fraud involving violations of federal banking regulations.
A second lawsuit filed by regulators claimed that Sahni wrongly kept $1.1 million of the bank’s money for himself. Sahni reached an out-of-court settlement with the government in that suit, and he received 10% of the money in question. The first suit is still pending.
Despite their ongoing litigation, Sahni and the regulators agree on one point: that American Diversified Savings Bank is crippled beyond recovery and may end up costing the government insurance fund more than $300 million.
