Ticor Title’s Parent Files for Protection : Bankruptcy: Westwood Equities, hurt by a poor property market and debt, says the Chapter 11 reorganization won’t prevent the sale of Ticor.
Crippled by a souring real estate market, a failed subsidiary and staggering debts, Westwood Equities Corp., the parent of Ticor Title Insurance Co., said Monday that it has filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.
The company, which listed $151.4 million in debts and only $144 million in assets, said it would ask a Los Angeles bankruptcy judge to allow the $70-million sale of Ticor to Chicago Title & Trust Co. to go through as planned.
Customers of Ticor Title, one of the oldest and largest title insurers in California, will not be affected, added Dennis Berkey, general counsel of Westwood. Ticor Title Insurance and Ticor Title Guarantee Co., a real estate data firm, continue to operate as usual, he said.
Berkey blamed Ticor’s woes on a souring real estate market, which has hurt Ticor’s revenue, as well as the failure of a former Ticor subsidiary, a development that damaged the company’s image. Debt from the company’s 1984 management-led leveraged buyout also played a role, Berkey said.
Financial results for the privately held firm were not readily available. However, Berkey said, Ticor Title lost more than $27 million in 1989 alone. Chicago Title & Trust Co. announced last month that it would buy Ticor Title for roughly $70 million. The exact amount is subject to revision, based on Ticor’s reserves and net worth, Berkey said.
The sale of Ticor Title was, in fact, one of the main reasons for the timing of the bankruptcy filing, he said.
“We had to file (to reorganize under bankruptcy laws) in order to sell the title insurance assets free and clear to Chicago Title and Trust,” Berkey said. “There are debts that have not been paid. Those creditors will now have a claim against the assets of the bankruptcy estate” rather than Chicago Title, he added.
Westwood’s biggest unsecured creditor is TMIC Insurance Co., a former subsidiary that is being liquidated by the California Department of Insurance, according to the filing. Westwood owes TMIC $22.5 million in principal and interest, the filing said.
The debt was part of a settlement that Ticor made when TMIC was first taken over by state insurance regulators, Berkey said. Ticor had agreed to pay TMIC $30 million in three installments, but it had only made one $10-million payment, according to Berkey.
TMIC, formerly known as Ticor Mortgage Insurance Corp., failed in 1986 after a Virginia-based real estate tax shelter called Equity Programs Investment Crop. defaulted on $1.4 billion in mortgage loans--nearly half of which were insured by TMIC.
The Guardian, a New York-based insurance holding company, is owed more than $17 million, according to the filing. Manufacturers Hanover Trust Co. is the only other major unsecured creditor, the filing indicated. However, the more than $700,000 in fees it is owed are on behalf of other banks, including Bank of America and Security Pacific, and those fees are “disputed,” according to the filing.
Other unsecured creditors are former employees and their spouses, who are owed pension and survivor benefits, as well as a wide array of real estate, plumbing and carpet vendors that are owed undisclosed “nominal” amounts, the filing says.
