In one of L.A.'s highest-profile alleged frauds, embattled businessman Ezri Namvar is seeking changes to his personal bankruptcy case that could have major implications for his personal finances and those of his numerous creditors.
Namvar, who has been accused of running a Ponzi scheme after his real estate investments soured, is attempting to have his bankruptcy proceedings converted from Chapter 11 to Chapter 7, which would reduce his long-term financial obligations.
The Business Journal has been following Namvar's case since early December, a few weeks before creditors forced him and his investment company, Namco Capital Group Inc., into involuntary bankruptcy amid concern that he was disposing of assets to pay back some creditors preferentially.
In a May 13 U.S. Bankruptcy Court filing, Namvar's counsel argued that a Chapter 11 bankruptcy, which typically results in a long-term payment plan for creditors, would constrain Namvar to a "lifetime of servitude" and would make him unable to provide for his family. In a Chapter 7 bankruptcy, Namvar's assets could be liquidated, possibly allowing him to walk away with no more financial obligations to unsecured creditors.
There will be a court hearing June 3 on the conversion request.
Sources said creditors generally oppose the bankruptcy conversion, which could net them next to nothing since Namvar's properties are encumbered with debt. Some creditors are said to have given their life savings to the businessman and are now destitute.
The bankruptcy trustee in the case said Namvar's personal difficulties pale in comparison to the troubles of creditors "who have lost everything they had."
"I am not moved by Mr. Namvar? protestations of hardships; there are people involved in this bankruptcy that have lost everything they have had. There are people that can't pay their rent," said trustee R. Todd Neilson.
Namvar, 57, financed his investments by gathering money from members of the Persian Jewish community in and around Beverly Hills for decades. His real estate empire, valued at $2.43 billion in summer 2008, collapsed last year.
Namco Capital owes more than a half-billion dollars to 464 creditors and it is believed Namvar also owes a large amount.
As part of the May 13 filing, Namvar made a personal declaration that said he essentially has "no liquid assets, doesn't have a car to drive and cannot enroll his son at Boston University because he has no money for the tuition.
"I cannot possibly explain the personal anguish under which I suffer," Namvar said. "The only avenue out of this morass is to begin anew." He could not be reached for further comment and his bankruptcy attorney, Stephen Biegenzahn, declined to comment.
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