Pioneer Mortgage Files Under Chapter 11 : Bankruptcy: The firm’s six units owe $35 million. Its president says he’ll turn the business over to an outside manager.

Gary Naiman, president and principal owner of Pioneer Mortgage, on Wednesday sought protection in U.S. Bankruptcy Court in San Diego for six corporations affiliated with his financially troubled company.

The closely held companies that operate as Pioneer Mortgage owe at least $35 million to creditors, according to the filings, which list total assets of about $7 million. Attorneys representing various Pioneer Mortgage investors on Wednesday predicted that the list of creditors would swell as more details about Pioneer Mortgage’s financial condition surface.

Naiman, in a related development, said that he would soon turn control of the troubled business over to an outside manager. “He’s going to remain at the helm until the selection of someone else, which is expected by the end of the week,” said Brent Whittlesey, Naiman’s Los Angeles-based attorney.

Naiman sought bankruptcy court protection amid growing pressure from an estimated 2,000 Pioneer Mortgage investors who had invested about $250 million through the company, but who haven’t received monthly checks since November. Pioneer Mortgage had arranged about $200 million in loans secured by trust deeds and $34 million in collateralized mortgage obligations.

Pioneer Mortgage’s financial problems surfaced late last year when the 46-year-old company, based in La Mesa, surprised investors by suspending monthly interest payments on loans it had arranged.

Lawyers who represent various groups of Pioneer Mortgage investors described the upcoming bankruptcy proceeding as extremely complex, but most applauded Naiman’s decision to seek protection in bankruptcy court.

“The only way this can be resolved is through a court-ordered operation,” said lawyer Robert J. Berton, who represents about 100 investors who invested about $50 million with Pioneer Mortgage.

Wednesday’s filing will not affect an ongoing audit by the state Department of Real Estate, according to department spokesman George Hartwell. “The DRE is charged with investigating to determine whether or not violations of real estate law have occurred, and the filing of bankruptcy would not change that responsibility.”

Whittlesey said that Naiman opted for bankruptcy court “to help stabilize operations so we can move forward from here. Pioneer’s assets are now in the jurisdiction of the courts.”

Whittlesey said investors’ funds would remain in trust accounts “in accordance with all state regulations . . . we are attempting to ensure that investors’ funds are properly handled, just as we believe they have (in the past) been properly handled.”

Pioneer Mortgage had “for many years made advances to investors to cover defaults by its borrowers,” according to a statement that Naiman released Wednesday.

“However, in December, 1990, Pioneer Mortgage exhausted its ability to advance funds to investors,” Naiman wrote.