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September 29, 2003

Bankruptcy Filing in Wolford Group Case

DES MOINES.   A bankruptcy filing was entered this morning in the Wolford Group matter by the Receiver named recently to control the assets and manage the business affairs of the Wolford Group, Inc. and the Wolford Corporation. The filing was made with the approval of Polk County District Court Judge Glen Pille and in cooperation with the Attorney General's Office.

"Bankruptcy is the best step now to move ahead and resolve this matter and protect the interests of people who were selling or buying homes in connection with Wolford," Miller said. "The Receiver played a very important role, but now we all believe it is best to move to a bankruptcy phase."

Miller's office filed a consumer fraud lawsuit August 20 alleging that the Wolford Group, Inc., the Wolford Corporation, Rodney Wolford, Sr., and Rod Wolford, Jr. engaged in deception, fraud and misrepresentation in their advertisements, representations and sales practices directed to consumers who wished to sell their homes or to buy homes. On Sept. 5 the Court appointed Holmes Foster to serve as Receiver and control the assets and manage the business affairs of the Wolford Group, Inc. and the Corporation.

Miller said the Receiver played a crucial part in stabilizing the situation and in some cases finding ways for people to complete transactions. The Receiver had Court authority to control documents, protect assets, and sort out the complex transactions of many buyers and sellers and investors -- and Miller said many experts in the community stepped forward to volunteer their time and expertise to stabilize and manage the matter. "We all concluded we have done all we can to take advantage of the Receivership, and now it's best to ask the Federal Bankruptcy Court to assist in determining the greatest protection for the greatest number of people."

The Bankruptcy Court has appointed Wes Huisinga as Trustee in the matter. Huisinga is a member of the Cedar Rapids law firm of Shuttleworth and Ingersoll. A meeting of creditors is set for November 5 at 9 a.m. in room 783 of the Federal Building, 210 Walnut St. in Des Moines. Miller said that will be an important opportunity for any home seller, home buyer, or investor to go on record with a claim that they are owed money by Wolford Group, Inc. or the Wolford Corporation.

The Bankruptcy Court has additional powers beyond a Receiver's to put all transactions on hold, and indeed to void transactions that took place in the last 90 days if they appear to be a "preferential transfer" that unfairly favors one creditor over others. The Bankruptcy Court also has "claw-back" power to void an insider transaction up to a year old if an insider wrongly obtained a preferential transfer of assets of the corporation.

Miller said several parties came forward to assist the Receiver during the last few weeks in an intensive effort to stabilize the situation and resolve as many individual matters as possible prior to the bankruptcy. "Every single person's situation is unique and often complex," Miller said, "but we were able to move forward on a number of them, transferring vacant properties back to some sellers, and working out refinancing or conveyances or other arrangements that helped the parties."

Miller credited firms and organizations in the community for stepping forward to provide extraordinary assistance in resolving matters related to Wolford, Inc.

Susan Boe and other members of the law firm of Faegre & Benson contributed enormous pro bono legal services in representing the Receiver and working with the Attorney General's Office in retrieving and organizing complex records, working out resolutions for some parties, and considering the bankruptcy filing. The McGladry & Pullen accounting firm helped the Receiver and Attorney General's Office analyze complex financial records. The organization Citizens for Community Improvement/CCI has played a key role in working with consumers and keeping them informed about how they should proceed in the matter. The State of Iowa Securities Bureau has focused on issues of persons who invested in the Wolford Group. The bankruptcy filing was completed by Anita Shodeen, a bankruptcy specialist.

Miller said it is expected that an attorney will be designated to serve as a coordinator of information and guidance for persons with claims or complaints involving the Wolford Group. The Iowa Finance Authority, Iowa Realty and others already have made financial contributions in support of the position.

Miller said the consumer fraud lawsuit filed by his office August 20 remains in effect in Polk County District Court. Defendants in the suit are The Wolford Group, Inc., and the Wolford Corporation, of 4214 Fleur Drive in Des Moines, Rodney Wolford, Sr., and Rod Wolford, Jr. The bankruptcy filing stays the lawsuit with respect to the corporation, but the suit will be pursued against the individual defendants.
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