Lefever Mattson heading towards bankruptcy, says email

Some of the investment funds from LeFever Mattson’s $400 million real estate empire will likely end up in bankruptcy court, according to an email to investors obtained by The Press Democrat.

“Some entities will be forced to seek protection under Chapter 11 of the U.S. Bankruptcy Code,” partner Tim LeFever wrote Monday to investors who had signed up for LeFever Mattson communications seeking to expose the allegedly unlawful maneuvering of another partner, Ken Mattson. “These filings will be necessary to protect valuable assets from seizure and ensure a transparent sale and claims process.”

No papers had been filed in federal court as of Tuesday afternoon. Tim LeFever did not respond to a request for comment.

The possibility of bankruptcy has been a subject of interest and some concern among hundreds of individual investors whose money has helped finance the duo’s massive real estate portfolio.

The Press Democrat contacted several investors, but none of them agreed to an official interview.

Their concern is not misplaced, said Brett Weiss, a board member of Weiss Law Group in Greenbelt, Maryland, and co-author of “Chapter 11 for Individual Debtors.”

“I’ve often said that bankruptcy is probably the most confusingly complicated area of ​​law,” Weiss said Tuesday. “It looks really simple. You have a few forms to fill out and, Boomyou’re bankrupt. But it’s kind of an overlay on all the other areas of law – investment law, real estate law, corporate law, secure transactions. It really can be incredibly complicated.”

This may be especially true for LeFever Mattson, given the fundamental disagreements between the partners over what exactly their investors own.

In group emails and a civil lawsuit, LeFever claimed that Mattson sold shares the company did not actually own, paying investors from a shadow account he created. Mattson insisted in his public statement and the lawsuit that the transactions were fair and that any failure to pay monthly dividends was solely LeFever’s responsibility.

One question on the minds of some concerned investors is how the bankruptcy proceedings will work alongside a half-dozen lawsuits that have been filed against Mattson, LeFever and their companies. They include a case filed in federal court that seeks class-action status.

The bankruptcy case will take precedence, Weiss said, putting everything else on hold — including class certification. That said, it’s not uncommon for a bankruptcy judge to allow other jurisdictions, such as state and U.S. courts, to decide factual issues first.

There is one potential hurdle in the bankruptcy process that LeFever’s email did not mention: Several investor agreements shared with The Press Democrat include a provision that partnerships that are part of LeFever’s Mattson portfolio cannot file for bankruptcy without a majority vote of the partners — that is, a majority of the fund’s investors.

It is unclear whether LeFever approached any of the investors for consent.

In his latest email, he also announced that LeFever Mattson had hired Bradley Sharp of Development Specialists as a financial advisor. Sharp, according to his firm’s website, has “managed and sold distressed public and private companies in and out of bankruptcy.”

Sharp will oversee LeFever Mattson’s financial and accounting advisors and work with management to develop a restructuring plan for the company, Tim LeFever wrote. Sharp will also “oversee the ongoing investigation into allegations against Ken Mattson, the company’s former CEO.”

According to LeFever, under Sharp’s leadership, the company is preparing a plan to monetize its assets in a way that maximizes returns for “all creditors and investors.” However, the monthly payments that some investors have relied on to pay their monthly bills will not resume anytime soon.

“The company recognizes the difficulties this creates and is committed to completing this process as expeditiously as possible,” LeFever wrote.

Closer to home, a number of Sonoma properties owned by companies linked to Ken Mattson continue to appear on the list of addresses set for public auction. With a major update: One property package already has an asking price. And as of Tuesday afternoon, the auction was set for 10 a.m. Wednesday at Fremont Park in downtown Santa Rosa, although the auction dates for Mattson properties have been rescheduled multiple times.

The lots at 525 West Napa Street and 520, 530 and 533 Studley Street — Duggan’s Mission Chapel and the estate behind it — are up for sale with an opening bid of just over $5 million. That price is set by the lender, in this case Duggan’s, which had a mortgage when it sold the properties to KS Mattson Partners (a company wholly owned by Ken Mattson) in September 2022.

In 2023, KS Mattson Partners sold the stake to Windscape Apartments LLC, for which Tim LeFever is the registered agent.

Public auctions of another seven properties owned by KS Mattson Partners have been postponed from August 9 to August 16.

You can reach Phil Barber at 707-521-5263 or [email protected]. X (Twitter) @Skinny_Post.