O.C. Man Linked to Silverado Collapse Files for Chapter 7
Former Denver developer Bill Walters, who defaulted on about $100 million in loans from Silverado Savings & Loan, has filed a personal bankruptcy petition in federal court here listing debts of $279 million.
The filing comes several months after Walters, a former business partner of one of President Bush’s sons, created a firestorm of controversy in Washington when it was revealed that he was living in a $1.9-million Newport Beach home a month after telling Congress he was broke.
The bankruptcy petition, which was filed Nov. 1, lists more than 200 creditors. The largest is New York banking giant Manufacturers Hanover Trust Co., which is owed $111 million. He even lists his ex-wife, Mary Lou McGuire, whom he owes $5.3 million.
In Southern California, Walters owes $5.2 million to Far West Savings & Loan in Newport Beach. Irvine businessman Burt M. Heimlich is listed as having a contingent $1.95-million claim.
Walters could not be reached for comment. Nathan E. Jones, his San Diego bankruptcy attorney, did not return several phone calls.
Walters was once one of Denver’s highest-flying real estate developers, helping to reconfigure the city’s skyline while amassing a personal fortune that in the mid-1980s was estimated to be at least $200 million. He moved to Orange County this year after his empire collapsed in connection with the depression in Denver’s real estate markets.
Silverado had bankrolled the Bill L. Walters Cos., and federal regulators claim that his firm’s default on $96 million in loans helped cause the thrift’s 1988 collapse, which is expected to cost taxpayers $1 billion.
Neil Bush, the President’s son, became the subject of a federal inquiry and the lightning rod for criticism over the savings and loan crisis in part because he approved loans to Walters while sitting on Silverado’s board of directors.
Congress has investigated charges that Bush may have violated conflict-of-interest laws because he was a partner with Walters in an oil-exploration firm. Bush is also a defendant in a $200-million lawsuit filed against some former Silverado officials by federal regulators.
“Silverado provided Walters with a ready source of cash for his ill-conceived, speculative projects in which Silverado generally assumed the risk of adverse market conditions,” the lawsuit filed by the Federal Deposit Insurance Corp. claims.
Walters’ actions drew national attention in July when it was disclosed that he was living in a Newport Beach mansion and dividing his leisure time between a $1-million desert retreat near Palm Springs and a $250,000 mobile home on Laguna Beach. Just the month before he told a House subcommittee he had “a negative net worth.”
Each of those homes is listed either in the name of his second wife, Jacqueline, or in a trust of which she is the beneficiary. The Newport Beach home is for sale.
Under Chapter 7, a federal bankruptcy judge will appoint an independent trustee to liquidate Walters’ assets and distribute them to debtors.
The law allows a debtor to hold on to $45,000 in home equity and up to $1,200 invested in a car. Jewelry, heirlooms and works of art exceeding a total of $2,500 must be sold.
The court-appointed trustee may also probe whether Walters has hidden assets or improperly transfered them to relatives or friends, said James I. Stang, a Los Angeles bankruptcy attorney and a former Chapter 7 trustee. This could include three homes and two Mercedes-Benzes that are held in the name of his wife, Jacqueline Walters.
Jacqueline Walters is listed in the bankruptcy filing as a creditor for “unpaid family expenses under prenuptial agreement” though the amount claimed is zero.
The Walters were married on Nov. 15, 1986, and the Walters Trust I--which is in her name and is the entity that purchased the Newport Beach home--was formed a day later. He transferred his $1-million Indian Wells condominium to her on Nov. 17 of the same year, according to records in the Riverside County recorder’s office.
Nearly all of the Walters’ creditors contacted on Friday refused to comment.
Walters told the House Banking Committee in June that he was doing everything he could to make good on his Silverado debts.
“I have elected to spend the last year and a half working diligently with my lenders, restructuring, staying alive for another day, so that I can pay every dime back if I can,” Walters said. News of Walters’ luxurious lifestyle created so much anger that an Orange County group this summer started weekly protests in front of his Newport Beach home that eventually attracted some of his neighbors.
“I’d love to be bankrupt like that. I think it would be fun,” neighbor Richard Unwin said Friday. “We should all be able to go out with two Mercedeses and a $2-million home.”
WALTERS’ LARGEST CREDITORS Former Denver developer Bill L. Walters has filed a Chapter 7 petition in U.S. Bankruptcy Court in Santa Ana. Here are the 10 largest creditors.
Creditor Amount owed(in millions) Manufacturers Hanover Trust Co. $111 ABS Capital Management Inc. 56 Mellon Bank 21 The Arizona Bank 19.8 Silverado Financial Corp. 18.5 NCNB Texas 17 Mary Lou McGuire 5.4 Far West Savings & Loan 5.2 Columbia Savings 3.4 Burt M. Heimlich 1.95
Source: U.S. Bankruptcy Court
