Mortgage banking industry law firm Butler & Hosch, P.A. filed an Assignment for the Benefit of Creditors to Florida law firm Michael E. Moecker & Associates, an action analogous to Chapter 7 bankruptcy.
Butler & Hosch closed their doors this week and laid off the entire staff. It will not open on Monday.
No one at Butler & Hosch could be reached for comment, but HousingWire obtained a copy of the May 14 memo emailed to employees and vendors from Bob Hosch, CEO and Senior Partner at Butler & Hosch confirming the story:
"It is with great sadness that I report to all of you regarding the difficult financial status of Butler & Hosch and its affiliates (“BH”) which has resulted in the filing of the state court Assignments for the Benefit of Creditors (“ABC”). I have voluntarily stepped down as CEO and Senior Partner of BH. The control of the BH companies has been voluntarily placed in the hands of an experienced third-party fiduciary, Mr. Michael Moecker."
Significantly, the bankruptcy-style filing and events leading up to it seem to have been sudden – the memo cites the company's aggressive growth over the past two years and how now there is not sufficient cash on hand to even meet payroll, according to the memo:
"How does the filing of these ABC’s cases impact you? Though Mr. Moecker has complete access to our assets, he will not have sufficient cash on hand to fund payroll at the end of this week. Without BH employees and attorneys there is no ongoing operation. BH cannot continue to function. To be clear, while I continue to hold out hope that our existing lender and/or strategic partners may provide an infusion of cash today, without it, BH will have no choice but to close its doors immediately."
Butler & Hosch had been quickly expanding its presence across the country over the last few years, buying up default assets in a number of markets.
Most recently, HousingWire reported that the Atlanta-based law firm of Morris Schneider Wittstadt agreed to sell its default assets to Butler & Hosch. The transfer of default assets between Morris Schneider Wittstadt and Butler & Hosch was complete in late January. Financial terms of the deal were not disclosed.
A slew of acquisitions occurred of both default assets and smaller firms as it looked to grow its presence on the West Coast. In February 2014, the firm acquired Seattle, Wash.-based Regional Trustee Services Corporation.
Before that in 2013 the firm also acquired Cal-Western Reconveyance LLC, once one of the largest trustee companies in the nation, after the trustee company's then-parent Prommis Solutions had filed for Chapter 11 bankruptcy protection earlier in the year.
A full list of HousingWire’s coverage of the firm’s history can be found here.
Assignment for Benefit of Creditors under Florida law is analogous to Chapter 7 bankruptcy, but doesn’t automatically start liquidation of assets. Under the Florida filing protection, the assignee, Moecker & Associates, serves as the effective executor, and can seek alternatives to immediate liquidiation.
“Significantly, one of the powers of the court is to allow the assignee to operate the business of the assignor for limited periods, if it is in the best interest of the estate to do so,” according to the Florida Bar. “This enables the assignee the opportunity to sell the business as a going concern, in order to obtain more value for the creditors, as there is generally a substantial incremental ‘going concern value’ component to an ongoing business, even if it is insolvent.”
Michael Moecker & Associates is a Florida firm specializing in providing investors, bank officers, shareholders, creditors and attorneys with the successful resolution of insolvency, bankruptcy and liquidation matters.