Reorganized PMC Ready to Start Repaying Investors : Bankruptcy: The Sherman Oaks mortgage broker is mailing $18 million to about 1,100 people. But they may never see all their money.

Property Mortgage Co., which abruptly collapsed into bankruptcy 14 months ago and left hundreds of investors with no way to retrieve their cash, is emerging from reorganization and is about to mail the investors at least a portion of their money.

An initial payout of $18 million is being sent this week to about 1,100 investors, many of whom live in the Los Angeles area. But it is not known whether they will get back the entire $150 million or so they invested in PMC and its affiliate, SLGH Investments Inc., both of which are based in Sherman Oaks.

A major mortgage broker for about 20 years, PMC arranged to lend cash largely to commercial real estate borrowers. The cash came from the investors and was held chiefly by SLGH until PMC arranged the loans.

Now that PMC is out of bankruptcy court, it will gradually be liquidated. The reorganization plan that took effect April 7 also calls for PMC’s secured investors--those whose investments were plowed into actual property--to get up to 75% of whatever income the properties generate either on their own or if they’re sold in the liquidation.

But 75% of what? How much cash PMC’s properties can fetch is anyone’s guess.

“The portfolio is currently performing OK,” said Ted Pianko, a lawyer for the official creditors’ committee of PMC. “Unfortunately, there is a serious recession in the real estate market in California, so no one is certain how this is going to come out in the long run.”

Also, a big chunk of PMC’s money was invested in apartment-house projects with a Carlsbad developer, JL Construction Co., and “the JL projects are not performing well,” Pianko said.

The balance of any proceeds from the portfolio will go to the unsecured creditors, legal fees and other administrative costs. The unsecured investments were not yet assigned to certain properties and were namely the cash held by SLGH. (Some investors’ money was divided between secured and unsecured accounts.)

In any case, PMC’s reorganization surprised bankruptcy lawyers, the investors and others for two reasons: The reorganization plan was assembled in a relatively short 13 months, and it was unanimously approved by the investors.

“It was the best option available to us,” said one investor, Gerald A. Silver of Encino. “If we didn’t vote for the plan, it would have thrust the whole thing into litigation, and that would have been counterproductive.

“Most of the investors were more interested in at least getting some percentage of their money back, even if it wasn’t the whole amount.”

Leon L. Vickman, a lawyer who represented several of the investors, said: “In a case of this large size, to get a plan confirmed within 13 months is quite an accomplishment.”

Most of PMC’s loans were second mortgages; that is, their repayment was subordinate to the property’s first mortgage if the borrower defaulted. In exchange for the added risk, the PMC investors got relatively high interest rates of 12% or more.

Without any warning, PMC and SLGH--then under the supervision of Elliot Fine and his son-in-law, Stanley Glickman--ran out of cash early last year, and some of their biggest investors forced the companies to seek protection under the bankruptcy laws on Valentine’s Day, 1991.

But last August, a court-appointed examiner said there was nothing sudden about PMC’s collapse. The examiner, Ted R. Roth, said PMC had been insolvent since 1984 but had continued sending interest checks to the investors as if nothing was wrong. It managed to do so, Roth added, by soliciting new funds from investors.

At least two investors have charged in lawsuits that the arrangement was simply a Ponzi scheme. Their cases are pending in Los Angeles courts.

What of Glickman and Fine? They haven’t been running PMC and SLGH for some time, having been replaced by a bankruptcy court trustee. That trustee, R. Todd Neilson, is now called a “resolution agent” whose job is to liquidate the companies’ assets as that becomes feasible.

“There is absolutely no way this company will end up reorganizing in the conventional sense” by making new loans or otherwise expanding “and, say, distributing stock to the creditors,” said Neilson’s lawyer, Alan D. Smith.

Also, Smith said he and Neilson are investigating “allegations of fraud, self-dealing and other wrongdoings” by Glickman, Fine and other former PMC/SLGH officers, which could possibly result in a lawsuit. But no formal complaint has yet been filed, he said.

Glickman declined comment. David Gubman, a lawyer for Glickman and Fine, did not return a call requesting comment.

Meanwhile, the examiner’s report that PMC was insolvent for years before it collapsed raised questions among some investors about the company’s oversight by the state Department of Real Estate, which granted PMC’s operating license.

The agency is only now launching a detailed investigation of PMC because, during PMC’s reorganization, the department was blocked by the bankruptcy court from auditing PMC’s business, said Randy Brendia, the agency’s regional manager of enforcement for Southern California.

Now, however, “we consider this a top priority investigation,” he said.

The investigation includes detailed questionnaires that were mailed to PMC’s investors last month. The surveys ask how PMC and SLGH solicited funds from the investors, where the companies said the money was going, and so forth. Brendia said he hopes the probe will be finished within 60 days.

He declined specific comment on PMC’s past performance or his agency’s reviews of the company. But he noted generally that if the agency finds evidence of wrongdoing in an investigation, it advises the state attorney general, the county district attorney, the Internal Revenue Service or other authorities, depending on the alleged offense.