Compromise Hinted as Judge Delay’s Ruling on Port’s Debt Plan

With the bankrupt Ventura Port District and its largest creditor inching toward a compromise, a bankruptcy judge Wednesday postponed a determination on whether the port’s plan for paying off its $22-million debt was satisfactory.

In the first court hearing since the port district filed a debt adjustment plan in January, U.S. Bankruptcy Court Judge Robin Riblet delayed a decision, saying she wanted to allow the parties time to reach a compromise.

Her decision to delay a decision until July 10 came after the opposing attorneys unexpectedly appeared to hit on a point of agreement.

Ventura Group Ventures, which is trying to collect on a $15.7-million court judgment against the port, has long charged that the district should sell off its land to pay its debt.

At a meeting between the two parties this year after the debt-adjustment plan was filed, Ventura Group Ventures demanded sale of six parcels at Ventura Harbor. But today, attorneys circulated documents in court saying they would whittle the request to just three--a mobile home park, a hotel complex and an undeveloped 20-acre plot of land.

“Oooh. That’s the first time I’ve ever heard that,” said Irving Sulmeyer, attorney for the port. “I’m delighted. That’s progress.”

David Kupetz, another attorney for the port district, was guardedly optimistic after Wednesday’s hearing.

“Potentially, it’s a breakthrough,” he said. “Potentially, it’s a new basis for a consensual plan. They stated on the record in court that would be acceptable, so we will analyze if that is viable.”

Dewitt Blase, an attorney for Ventura Group Ventures, was less optimistic.

He said that until the port district considers putting the 20-acre undeveloped parcel up for sale, there will be little room to negotiate.

“That would be the touchstone for anything we would be willing to consider,” he said. Development of that 20-acre parcel is crucial to the port district’s recovery plan. The district has a proposal for a condominium development there before the California Coastal Commission.

Ultimately, the bankruptcy hearings will decide the fate of Ventura’s harbor. In July, Judge Riblet will again consider the port district’s disclosure statement detailing its assets and debts. If she determines that it is adequate, she will go on to evaluate the merits of the debt adjustment plan, a blueprint for paying off the port’s creditors.

At that point she will either rule that it is acceptable, that it needs to be strengthened, or that it falls short.

If an acceptable plan cannot be developed, the port district could lose its bankruptcy protection, and creditors could begin seizing assets.

The port district, an independent agency that operates Ventura Harbor, declared bankruptcy four years ago and has not paid any of its creditors since.

In the debt adjustment plan, the port offers two options for repaying creditors. The first is to put the entire port--including boat slips, marinas, shopping centers and a mobile home park--up for sale.

A second option would be to gradually develop some parts of the harbor. The district has tried to do that for several years--with little success.

Ventura Group Ventures, which won a court judgment against the port in 1991 for a breach-of-contract case, filed an objection with the court last week charging that the disclosure statement is not adequate.

It argues that officials have not done all they could to pay off their debts. Citing a state statute, Ventura Group Ventures says the district could have voted to dissolve itself and turned its assets and debt over to the city.

The group has also argued, repeatedly, that the 274-acre district should sell off some of its parcels to pay its debts. A 1995 appraisal of port property valued it at $33 million. But the port district has resisted that idea, saying they could be left with all the legal and dredging bills, and none of the revenue from the most productive parcels, such as the mobile home park.

Sulmeyer repeated that position Wednesday.

“We want to be as flexible and forthcoming as we can,” he told the judge. “But we cannot retain all the obligations of running and operating the port, while giving up a portion of the income-producing property.”

Attorney Jay Michaelson, for the creditor, disagreed, disputing the numbers the port district used in its business plan.

“Even if certain parcels are sold,” he said, “the district could still carry on its essential services.”