Investment Firm Barred From Bankruptcy Filing

An Orange County Superior Court judge on Wednesday issued a temporary restraining order barring Teachers Management & Investment Corp. from seeking bankruptcy protection.

The Newport Beach investment fund, which for 26 years has offered California educators an opportunity to invest in land and commercial properties, was sued Aug. 23 by four investors who alleged that the company is insolvent. The lawsuit, which accuses the company’s operators of losing $100 million of investor funds through fraud and racketeering, seeks appointment of a receiver to take over TMI.

TMI’s owners, Maurice B. Shuman and James R. Martin, vehemently deny all the allegations in the lawsuit and say that some of the company’s investments have declined in value because of California’s real estate slump.

Judge Floyd H. Schenk’s restraining order will be in effect until Sept. 19, when a hearing is scheduled on whether a receiver should be appointed.

About 30 investors, most of them elderly, were gathered in the courtroom. They hailed the judge’s action, as did the plaintiffs’ attorney.

“It’s the first time that the investors have had some control over where their money is going,” lawyer Ron Rus said. “For the first time, TMI is being held accountable to someone.”

Without a restraining order, Rus said, TMI’s operators could have used federal bankruptcy laws to put the company out of reach of the lawsuit.

The restraining order prohibits TMI from making bankruptcy filings for itself or any of its dozens of limited partnerships. It also prohibits the company from “commingling the funds and/or other property” or from making any payments or disbursement of the funds except for two of the operating partnerships.

TMI officials could not be reached for comment Wednesday. Neither could the law firm representing the company--the Irvine office of Jones, Day, Reavis & Pogue.