Telefile Turns to Chapter 11 to Block Foreclosure by Ex-Chairman
The longtime president, chairman and chief executive of an Irvine computer maker forced his ailing company into bankruptcy court Monday after he resigned his positions and foreclosed on the firm to recover what he said was an investment of more than $4 million.
Telefile Computer Products filed for protection Monday under chapter 11 of the federal Bankruptcy Code in Santa Ana to block the foreclosure by Samuel V. Edens, who headed Telefile and its parent company, Telefile Computer Corp., until he began the proceedings Sept. 21.
The company’s assets were to have been auctioned Monday, but the bankruptcy proceedings kept the auctioneer at bay.
Edens is in Paris and could not be reached for comment, said Leonard R. Shulman, his attorney.
He said Edens, who headed the company for 15 years, is trying to get an estimated $4.4 million in debt owed him by Telefile Computer Products.
“We were not totally surprised, because of the financial position of the company,” said a company spokesman who refused to give his name. “I suppose the timing was more surprising.”
Telefile Computer Corp., the holding company for Telefile Computer Products, reported third-quarter losses for fiscal 1987 of $521,686 and nine-month losses of $2 million for the period ended June 30.
C.B. Reehl, executive vice president of both companies, called the foreclosure “a long and complicated matter that goes back to 1981 and a debt restructuring.”
Edens assisted the company in obtaining a Small Business Administration loan and accepted personal liability for a number of the Telefile Computer Products’ debts.
“Because of the substantial losses that had been sustained by the business in the last couple of months, Mr. Eden’s security interest was being significantly depleted,” Shulman said. “Consequently, he believes that the only ability he had to preserve his security was by foreclosing. It was a precarious situation, and that’s why he resigned.”
Reehl said the company has about $7.6 million in liabilities. About $1.7 million of that is in accounts payble to an estimated 125 creditors.
