Creditors Want Judge to End Port District Bankruptcy : Finance: Group wants to pursue a lien against Ventura agency to collect a $15-million debt.

Lawyers for the only public agency in Ventura County ever to declare bankruptcy will plead with a federal bankruptcy judge Thursday to continue safeguarding the district from a $15-million debt that grows larger every day.

The Ventura Port District’s top creditors are trying to have the August bankruptcy set aside so they can pursue a lien on the port district’s assets or force the district to raise taxes to get the judgment paid off.

Attorney John Johnson, who will ask Judge Robin L. Riblet to throw out the district’s August bankruptcy petition, said port officials have never intended to repay his clients.

“They came here one day, gave us a copy of the budget they had just adopted and said, ‘Look at the budget, we’re losing $200,000 a year,’ ” Johnson said. “Right after that they went out and revised their budget to give themselves a raise.”

Port district General Manager Richard W. Parsons said Monday that staff raises granted by the Ventura Port District board of directors have no bearing on the agency’s inability to pay its debts.

“That’s one (argument) they’re raising only in the local press because legally it’s totally irrelevant,” Parsons said. “Those raises were granted at a time when we didn’t know what the Supreme Court was going to do.”

Harbor operations have proceeded as usual despite the August bankruptcy declaration, Parsons said.

A Ventura County Superior Court jury in 1990 awarded harbor developers Ocean Services Corp. more than $31 million in damages in a breach-of-contract case against the port district.

The judgment, later whittled to $15.5 million plus 10% annual interest, was affirmed by the state Court of Appeal in May. The decision became final on Aug. 19, when the state Supreme Court refused to hear the case.

The port district filed for bankruptcy the next day, saying in court papers that it had no choice because the group that bought the judgment from Ocean Services refused to promise it would not pursue a lien on district assets.

“It’s hard to enter into negotiations when somebody is not assuring you they won’t start another legal action to improve their position,” Parsons said.

The port’s declaration supersedes other pending litigation, under federal bankruptcy laws, effectively derailing payment of the $15 million.

Meanwhile, attorneys for Ventura Group Ventures, the partnership that acquired the judgment from Ocean Services when that company went bankrupt, asked a Ventura County Superior Court judge to begin foreclosure proceedings on district-owned property.

A pretrial conference on that case is scheduled Oct. 29.

Johnson and other attorneys representing Ventura Group Ventures said in court papers that the district has made no effort to satisfy the judgment.

The port district “filed for Chapter 9 protection solely as a result of a judgment entered against it in favor of Ventura Group Ventures,” the motion to dismiss the bankruptcy states.

But the district’s attorneys insist in their response to the motion to dismiss that they need the time that bankruptcy protection provides to sort out their debts.

“The district has never once refused to pay the judgment,” the port district’s attorneys wrote.

The bankruptcy “is an effort to provide for the orderly settlement of the judgment, along with other debts of the district, as part of a comprehensive adjustment plan,” port district attorneys argued.

The Ventura Port District, which this fiscal year will spend $2 million of its $2.1-million income, owes other creditors about $5 million, according to the bankruptcy petition.

But Ventura Group Ventures wants to halt the bankruptcy so it can seize a piece of the district’s $50-million holdings in the Superior Court case.

Parsons, who declined to say what he would recommend the board of directors do next if the bankruptcy is disallowed, said the district is owed “several million” dollars by Ocean Services as a result of unrelated loan defaults.

Ironically, Ocean Services stands to collect 25% of any cash Ventura Group Ventures collects from the port district, according to papers on file in the bankruptcy case.

Judge Riblet is scheduled to hear arguments Thursday morning in Santa Barbara. She could render her ruling immediately or take the matter under submission.