Integrated Resources Files for Bankruptcy
Integrated Resources Inc., once the nation’s biggest seller of tax-sheltered investments, sought federal bankruptcy protection today after talks with creditors collapsed on restructuring more than $1 billion in debt, much of it in high-yield junk bonds.
The troubled financial firm’s filing came a day after Drexel Burnham Lambert Inc., the Wall Street junk-bond giant that has foundered because of scandal and financial problems, said it is seeking financial help. Integrated was an important Drexel client.
Integrated’s filing under Chapter 11 of federal bankruptcy laws protects the real estate and financial services company from creditors while it continues to operate and tries to reorganize its finances.
The company said none of its subsidiaries and affiliates are included in the filing, made in U.S. Bankruptcy Court in Manhattan.
Integrated Chairman Stephen D. Weinroth said the company was forced into the filing because several creditors who refused to negotiate a restructuring had filed or planned to file legal complaints seeking more than $40 million owed by the firm.
Trading in Integrated was halted today on the New York Stock Exchange. Integrated closed at 25 cents a share on Monday.
Integrated was originally a real estate company and expanded rapidly several years ago by selling tax-sheltered investments, but that business was scuttled by 1986 tax-law revisions. The company then moved aggressively into insurance and mutual funds, financed largely through junk bonds arranged by Drexel.
Weinroth said the firm’s assets currently are about $1 billion less than liabilities.
About $800 million of the debt is in junk bonds, the bulk of it sold by Drexel, whose parent company said today that it too is considering filing for Chapter 11 protection.
According to court papers filed this morning, Integrated also has $610 million in subordinated debt outstanding.
According to its balance sheet for June, 1989, the most recent filed, Integrated had total assets of $1.4 billion and a negative net worth of $558 million. Its total debt was $1.62 billion.
The firm has estimated that it lost about $1 billion in the second quarter, and the company is estimating a large loss--believed to be about $200 million--for the 1989 third quarter.
According to court papers, Integrated said its top 10 creditors included large banks and savings and loans, which bought much of the junk-bond debt issued by Drexel under its indicted former bond leader, Michael Milken.
