Woodland Hills, Calif.-based C.M. Meiers Co. Inc. is being auctioned on Friday at a U.S. bankruptcy court near Los Angeles.
Following a Chapter 11 bankruptcy filed on Jan. 9, the firm was placed in the hands of a trustee by the court and is being sold at auction by its appointed trustee, Bradley D. Sharp.
The troubled 76-year-old brokerage has been up for sale for some time, but worsening financial conditions have sped up the process, Sharp said.
“They’ve been for sale for a while,” he said. “Due to the financial conditions of the company, we’ve got to do a quick sale.”
He added, “It’s because of cash flow, and it’s getting hard to keep producers and employees around.”
The brokerage had 50 employees before the financial troubles set it. Sharp didn’t say how many work there now, only that “it’s less than 50.”
Sharp was appointed trustee on Jan. 23. He’s selling right, title and interest to the assets of the brokerage, which includes accounts receivable, the brokerage’s book of business, its name, phone numbers and other intangibles, as well as tangibles like computers and office furniture.
As for certificates of authority for the books of business, Sharp said, “The winning buyer will have to deal with the carriers.”
The minimum bid has been set at $750,000, but that includes the assumption of liabilities and the cash purchase price.
Sharp declined to state how much the brokerage’s book may be worth, or just how far the brokerage is in debt, stating that such information is available to bona-fide bidders who have signed non-disclosure agreements.
So far two bidders appear to be in the hunt, but only one bidder has submitted a bid so far, Affinity Global, a stalking horse bidder, Sharp said. He declined to offer details of Affinity’s bid.
Executives at Woodland Hills-based Affinity were not immediately available for comment. On its website, Affinity states it offers a variety of services, including commercial property and auto enhancements, healthcare programs, and workers’ compensation enhancements.
“I have an opening bid and a contract, and anybody who wants to bid has to bid against that,” Sharp said.
Final bids are due to Sharp at 8 a.m. The auction takes place at the United States Bankruptcy Court Central District of California San Fernando Valley Division courthouse at 1 p.m. Bids must be submitted to Sharp via email (firstname.lastname@example.org) at and at the C.M. Meiers offices at 21045 Califa St.
Sharp did not say who the second bidder is, only that they made known to him their plans to submit a bid, but have yet to do so.
The decisive blow that sent the brokerage tumbling into financial failure was a lawsuit filed against the brokerage by one of its top producers, Sharp said.
“There was litigation with a former producer the company lost, it went to arbitration and there was judgment against the company,” he said. “I think that was really the precipitating event.”
Court documents show that in June Gensar Saleigh and Capitol Financial Services were awarded nearly $400,000 in damages plus attorneys’ fees by a commercial arbitration tribunal over a breach of contract suit brought by Capital.
Sharp said that under the absolute priority rule C.M. Meiers owners get nothing from the sale until all creditors can be paid off in full, with secured creditors first in line, followed by expense creditors, priority creditors, general unsecured creditors and any equity holders.
Owners of C.M. Meiers couldn’t be reached for comment.
The brokerage’s creditors include current and former producers, including Capitol, rent payments due property owners of C.M. Meiers’ Woodland Hills offices, and a bank that lent the brokerage money, according to Sharp.