Five prominent El Paso businessmen, including Paul Foster and Miguel Fernandez, submitted $6.2 million in offers for 12 properties owned by William “Billy” Abraham in his bankruptcy cases.
The offers on nine Downtown buildings and three properties in other parts of the city have been rejected for now as a bankruptcy trustee handling Abraham’s cases determines which buildings might need to be sold and then possibly solicits more offers through an Austin real estate broker.
But Abraham can complete the pending $874,000 sale of one of his Downtown buildings, which the city of El Paso needs to demolish to make way for its proposed Downtown arena, a bankruptcy judge decided during a court hearing Thursday.
Franklin Acquisitions, Abraham’s real estate investment company, and Abraham himself filed for Chapter 11 bankruptcy reorganization Feb. 6.
Abraham and Franklin Acquisitions own 29 properties, including 15 mostly vacant, mostly dilapidated Downtown buildings, many of them historic buildings, with an estimated value of $36.8 million, according to his amended financial statements.
In his original court filings, he had reported an estimated value of $31.6 million.
“I’m pleased to see that some offers have been submitted,” U.S. Bankruptcy Court Judge Christopher Mott said at the hearing. “But the market needs to be tested” to get the best offers, he said. In his ruling, he said that the trustee could hire Austin real estate broker Mark Hall to possibly help sell some of Abraham’s properties.
“I am very cognizant of the fact that some of these properties have significant meaning to the city of El Paso … the community of El Paso,” Mott said.
That’s why the process of trying to sell some of the buildings needs to get started immediately, Mott said.
Hall, the real estate broker, testified that he had received several other offers on some of the properties, including a verbal offer of $3.1 million on the Kress building Downtown from El Paso businessman Greg Malooly. Foster, in a proposed contract, offered $1.2 million for the Kress building.
Abraham said after the court hearing that he’s putting together a bankruptcy reorganization plan that will pay off his debts without selling any properties other than the property sold to the city.
“This is a Chapter 11 (reorganization) bankruptcy and it’s not a foregone conclusion that properties will be sold,” Abraham said.
Mott accepted an agreement between the bankruptcy trustee and the city that allows Abraham to close the previously agreed to sale of 212 W. Overland Ave.
The city will pay $855,000, plus a $19,000 relocation fee, for the property. Abraham will have to pay $6,363 in delinquent property taxes and an unspecified amount for 2018 property taxes on the property from the sale proceeds, said Stephen Sather, an Austin lawyer representing the trustee.
Another $89,197 will go to pay off two other creditors, and the remaining sales proceeds will be held by the trustee to pay off other creditors, he said.
City officials made a deal with Abraham last year to sell the Overland property because it’s in the path of the city’s proposed arena in the so-called Duranguito neighborhood in the Union Plaza District. The now-vacant building had housed restaurants, and years ago was a Chinese laundry, according to El Paso historians.
The El Paso law firm Gordon Davis Johnson & Shane, which represents clients owed $1.3 million in unpaid court judgments against Abraham, in the past three weeks submitted 12 offers to the trustee from the five prominent El Paso businessmen. A list of the offers, made through sales contracts, was submitted to the court Thursday as evidence during the court hearing.
The potential buyers are: Franklin Mountain Management, Foster’s real estate management company, which submitted offers on two Downtown buildings; Fernandez, CEO and co-founder of Transtelco, an El Paso-Juárez telecommunications provider, who submitted offers on four Downtown buildings; Alvaro Bustillos, CEO of Vaquero Trading, an El Paso cattle marketing company, who submitted offers on three Downtown buildings and two other properties in other areas of El Paso; and Tom Bohannon, chief executive officer of Bohannon Development Corp., an El Paso apartment complex developer, who made an offer on a house.
On March 23, Mott appointed Chapter 11 Bankruptcy Trustee Ronald Ingalls, a Fredericksburg, Texas, lawyer, to handle Abraham’s case, at a pay rate of $350 per hour.
The trustee will determine which Abraham properties might need to be sold to pay off his debts. Those include more than $500,000 in delinquent city property taxes, according to Abraham’s amended financial statements.
Ingalls testified that most of the offers made by the El Paso businessmen appeared to be too low.
“I’m underwhelmed by most of the offers,” Ingalls said during an interview outside the courtroom.
Some people think a bankruptcy case means properties can be sold well below what they are worth, but that is not the case, he said.
Harrel Davis III, the lawyer representing the businessmen who made the offers, testified that Bustillos’ offers were low, Those were aimed at getting in the “bidding game,” as is traditionally done in bankruptcy cases, he said. Foster and Fernandez submitted their own offers, so he wasn’t certain if those were designed as initial low bids, Davis said.
Abraham’s estimated property values are a compilation of El Paso Central Appraisal District appraisals, previous sale offers and estimates on Hudspeth County acreage, according to Abraham’s court filings.
Abraham and Franklin Acquisitions have $9.3 million in debts, according to his filed amended financial statements, and assets valued well over that amount.
Abraham continues to maintain in his court filings that he only has a net monthly income of $726. Almost all his gross monthly income of $29,425 goes to monthly property mortgage loan payments, Abraham reported in his revised financial statements.
He also reported that the Abraham Commission, the name he uses to conduct his personal business, had gross income, before deductions, of $346,242 in 2017 and $424,142 in 2016. Those numbers were slightly revised in his amended filings.
Franklin Acquisitions collected $69,024 in rents last year. But Abraham’s filings continued to maintain that the company had no cash, no bank accounts and no investments. In his original filings, Abraham reported that Franklin Acquisitions loses an average of $924 per month. No statements of gains or losses were listed in the revised filings.