Judge Blocks Creditors’ Actions Against Port : Courts: A motion to throw out the agency’s bankruptcy petition is denied. Ventura Group Ventures argued that the district was merely trying to avoid paying its bills.

A federal judge Thursday blocked creditors from trying to force the Ventura Port District to raise taxes or sell off portions of its $50 million in assets to pay a multimillion-dollar judgment awarded by a Superior Court jury three years ago.

U.S. Bankruptcy Court Judge Robin L. Riblet denied a motion brought by the chief creditor, Ventura Group Ventures, which asked the judge to throw out a bankruptcy petition filed by the district in August.

The judge ruled that the district did not act in bad faith when it filed for bankruptcy one day after the state Supreme Court decided against hearing a final appeal of the multimillion-dollar award.

Nor did the judge agree with legal arguments by creditors that the district was ineligible for bankruptcy because it still is conducting normal harbor operations and is not legally insolvent.

“Only when the Supreme Court ruled contrary to the port district and the Ventura group was unwilling to reach an accommodation did the port district find it necessary to file this bankruptcy petition,” Riblet said.

The judge’s decision also stalls a Ventura County Superior Court case filed by Ventura Group Ventures the same day the district filed for bankruptcy.

That action was brought in an effort to begin foreclosure proceedings in a state-level court. But under federal bankruptcy laws, a bankruptcy petition automatically suspends other litigation.

Lawyers for Ventura Group Ventures did not agree with Riblet and vowed to appeal.

“If she is correct in her analysis, then any public agency would never have to exercise any fiscal planning responsibility,” attorney John Johnson said.

The creditors’ attorney said the Ventura Port District, the only public agency in Ventura County ever to declare bankruptcy, never intended to pay the $15-million breach-of-contract judgment.

“There’s been no offer, no suggestion that they’re willing to make any offer,” Johnson said. “They simply don’t want to pay the judgment.”

In 1990, a Ventura County Superior Court jury awarded Ocean Services Corp. more that $30 million after lawyers for the harbor development firm successfully argued that the port district breached its development contract with Ocean Services.

The judgment, later pared to $15.5 million plus interest, was sold to another investment group, Ventura Group Ventures Inc., for $115,000 after Ocean Services itself went bankrupt, Johnson said.

As part of that deal, Ventura Group Investors promised to finance court costs and give Ocean Services 25% of whatever money was recovered from the Ventura Port District, Johnson said.

In May, the state Court of Appeal affirmed the multimillion-dollar judgment. But district commissioners appealed to the state Supreme Court, which declined to hear the case Aug. 19, the same day commissioners voted unanimously to declare bankruptcy.

Ventura Group Ventures sought to have the bankruptcy petition set aside because it argued that the port district was merely trying to avoid paying its bills.

But Riblet agreed that port district officials, who offered copies of their $2.1-million 1993-94 annual budget as evidence, had made a fair attempt to negotiate a payment schedule.

“Even paying the judgment over a 10-year period . . . the debtor, it is clear from the budget provided, would be unable to make even the first payment,” she said.

The ruling Thursday delighted port district General Manager Richard W. Parsons, who has said all along that the district could never afford the $15-million judgment.

“This is the appropriate outcome, but this is not an arena we’re pleased to be in,” he said outside the U.S. Bankruptcy Court.

The district lists about $5 million in debts--in addition to the $15-million judgment--on the bankruptcy petition. Most is owed to the state, but a share is owed to bondholders and employees, the district said.

Attorney Irving I. Sulmeyer, who represented the port district in the proceeding, said he believed Ventura Group Ventures attorneys would approach him on a potential settlement, but declined to say what he would recommend the district spend to reach an agreement out of court.

Sulmeyer said he would prepare a repayment plan that would include paying some money to all the district’s creditors within months. He told Riblet he already had attempted to settle with Ventura Group Ventures out of court, but that no agreement was able to be reached.

After Thursday’s ruling, however, Johnson said the district never tried even to settle the years-old case.

“They have never offered a penny,” he said.

Johnson said if Riblet’s ruling is not overturned on appeal, it would “limit the responsibility of bureaucrats to live within their means.”

He said he would ask Riblet for permission to continue the Superior Court case while an appeal of her decision is processed.