Vendors Say They Are Still Unpaid Despite O.C. Pledge


Frustrated business owners who continue to perform work for Orange County complained Thursday that since the county’s bankruptcy filing last month most are still not being paid as promised.

A top county finance official vowed that all businesses providing goods and services after the Dec. 6 bankruptcy filing would be paid in full, but he could not say how soon.

This tepid response worried the more than 100 mostly small-business people who assembled at the county administration building Thursday to devise strategy for dealing with the largest municipal bankruptcy in U.S. history. They are collectively owed millions for work performed before the bankruptcy, for which they will have to compete in court with the county’s other creditors for payment.

But even more disturbing for some has been the dearth of payments in the last five weeks, because businesses were supposed to be paid in full for sales made after Dec. 6.


“It scares me because that is not acceptable in any bankruptcy,” said Mary Ann Schulte, chief financial officer for a Santa Ana construction company who is acting as chairwoman of bankruptcy court subcommittee formed by vendors to the county.

Richard Marshack, the subcommittee’s lawyer, said that he plans to ask U.S. Bankruptcy Court Judge John E. Ryan to rescind the county’s plan to continue to pay interest to its bonds’ owners until its suppliers are paid for recent work. Ryan approved such payments for January earlier this month.

“It is intolerable to stiff the vendors again,” Marshack said. He blamed the overdue county payments on paperwork difficulties--a steadily shrinking county staff having to sort a mountain of invoices into those received before and after the bankruptcy. He said he also believes the county may be putting a higher priority on solving its budget deficit than worrying about supplier payments.

Fred Blanca, director of the county’s management and budget division, told the group of vendors that “it’s the county’s intention to pay post-petition claims in a timely manner.” But when pressed on how soon that will be, he answered, “I can’t say.”


After the meeting, Blanca said he will look further into vendors’ contentions that they aren’t being paid.

Some vendors say their situations worsen by the day.

Cristiene Ringer, who with her husband operates computer supplier Intech of Trabuco Hills, said her company sold equipment to the county that was obtained with credit cards in expectation that the county would make payment before the bills arrived. Now, $8,600 in credit card debt is coming due.

“Now we don’t know whether we are going to go out of business,” she said. “They’ve got all our capital.”