Judge Approves Pact With Pioneer’s Former President

U.S. Bankruptcy Court Judge James E. Meyers approved a controversial agreement Monday that calls for former Pioneer Mortgage President Gary Naiman to forgive millions of dollars in claims against his old company as well as turn over $1 million in cash.

Meyers acknowledged that many investors in La Mesa-based Pioneer would find the settlement difficult to accept because it allows Naiman and his family to retain as much as $1.25 million from Naiman’s pension plan.

Before entering Chapter 11 bankruptcy proceedings in January, Pioneer had arranged $200 million in real estate loans for 2,000 investors. More than $150 million of those loans are no longer current, and investors fear that they will not recoup most of their investment.

But Meyers also described the agreement as “fair and just” because it essentially stripped Naiman and his wife, Sharon, of personal assets that Pioneer would have received had the company successfully brought suit against the couple.

“In their hearts (Pioneer investors) will say ‘no,’ but their heads will say ‘yes,’ ” Meyers said of the agreement, which will give Pioneer managers funds that are needed to operate the cash-strapped company.

Meyers said the agreement approved Monday makes sense in part because it gives Pioneer immediate access to funds in Naiman’s retirement fund. Attorneys for Pioneer have argued that federal laws prohibit Pioneer from going to court to gain access to funds in Naiman’s pension plan.

According to the agreement approved Monday, Naiman will turn over $1.03 million in cash drawn from his personal retirement fund. Naiman also must pay fees and taxes generated by the early withdrawal.

Bob Rose, an attorney for Naiman, acknowledged that his client could be left with as much as $1.25 million in his retirement account. However, Rose argued that the bulk of Naiman’s retirement plan is “speculative investments” that may not carry much cash value when eventually converted.

Don McGrath, an attorney who represents Pioneer’s creditors committee, said Monday that the committee remained split on whether the agreement is acceptable.