Closing Arguments Heard in Silverado Bankruptcy

The bankruptcy trial of Bill L. Walters, a former Denver real estate developer and a key figure in the collapse of Silverado Banking, Savings & Loan, concluded in U.S. Bankruptcy Court on Thursday with closing arguments.

Judge John Wilson said he will consider the arguments before deciding whether to approve Walters’ application to liquidate his assets under Chapter 7 of the U.S. Bankruptcy Code. He set no date for a ruling.

Federal regulators are trying to block the liquidation so that Walters, who defaulted on $100 million in loans from Silverado, will remain liable for his debts. The 1988 collapse of Silverado is expected to cost taxpayers as much as $1 billion.

Walters, who contended in court papers that he owes $279 million, is seeking protection from his creditors and a discharge from his debts.

George Manning, Walters’ attorney, admitted that Walters made mistakes in his original bankruptcy filing. For example, Walters omitted the fact that he was receiving $10,000 a month for his services to a real estate development firm when he filed for bankruptcy in November, 1990. Manning told the court that those mistakes were honest ones, however, and did not constitute a pattern of plotting to deceive creditors by hiding assets.

Herbert Bernhard, attorney for the Resolution Trust Corp. and the Federal Deposit Insurance Corp., argued that Walters had begun planning for “creditor protection” as early as 1986 by transferring assets to his wife through a prenuptial agreement and creating trusts that would effectively remove money from the hands of creditors. The government agencies say that, although Walters says he is broke, he continues to maintain a $1.9-million Newport Beach estate, a $1.8-million Indian Wells house and a $250,000 Laguna Beach mobile home.