CREATED Sep 25, 2012 - UPDATED: Sep 26, 2012
Reporter: Kevin Keen
Web Producer: Mekita Rivas
TUCSON (KGUN9-TV) - A Southern Arizona property management company said it's millions of dollars in debt, but the people owed that money may never see a cent.
Tucson-based Rathbun Realty filed for bankruptcy Friday. Its many customers -- including property owners throughout Pima County -- are left wondering if they'll ever get the money owed to them.
On its initial bankruptcy form, Rathbun estimated it owns up to $50,000 in assets. It also estimated it owes much more: $1 million to $10 million. Why such a wide range? The bankruptcy form itself doesn’t allow for a more precise total to be provided.
Tucson bankruptcy attorney Rob Charles, who's not involved in this case, said the numbers, along with something else on the bankruptcy form, foreshadow trouble for people owed money by Rathbun.
9OYS asked Charles, “Do things look good or not look good for people who are owed money?”
“The only information you have is that on the bankruptcy petition there was a box checked (that) the debtor doesn't believe there'll be assets available to pay creditors,” said Charles, a partner at Lewis and Roca.
In other words, Rathbun anticipates not being able to ultimately pay its bills, according to the filing.
The company filed for chapter seven bankruptcy, which means a trustee generally will sell everything the company owns to pay down as much debt as possible. Charles said a company usually no longer exists after the process, describing that process as “messy" in this case.
“I don't represent anyone in the case, but the suggestions that there was a lot of money being collected on behalf of owners that's apparently missing, that some tenants are expressing concerns about payments that they've made suggests that it's going to be difficult to go through the financial records and figure out what money should be here, where did it go, who caused it to not be here, if that's what happened," Charles said.
Charles added that if there's money in the end, "administrative expenses" are generally paid first, along with taxes and employee claims.
Other people -- like Rathbun customers who are property owners -- may be out of luck. The company recently stated on its website it managed more than 700 properties.
Tucsonan Roy Warden said Rathbun Property Management owes him nearly $112,000 after a successful court case against the company earlier this year. Warden claimed, among other things, the company stole his property. The case went in front of a jury.
Despite the bankruptcy filing indicators, Warden expected more of Rathbun's money to be found and paid to the right people.
“Any accounting student could sit down at nine o'clock with the records, the names of banks and so forth and, by noon, figure everything out,” Warden said. “There is a whole lot of money that went someplace. Unless it was taken and burned up in a furnace that money exists someplace.”
Charles said the process could take months to years. One of the next steps is a meeting in November where people Rathbun owes money to can come to hear more about the case.
In a about a week, the company will have to file more detailed information about its debts and assets, which should include more precise totals of assets and liabilities.
Rathbun Realty and its bankruptcy attorney did not return KGUN9’s request for comment. Rathbun Property Management’s website is offline.