Homeowners associations that are auditing records as a result of Koger Management Group's financial problems have until Dec. 4 to file a claim because the embattled company filed for bankruptcy.
Koger managed at least 25 HOAs in the Fredericksburg region and all will be served with notices of the Chapter 11 bankruptcy filing. Attorneys questioned for this story said the claim doesn't have to be exact. Any HOA that believes it is affected should contact an attorney to file a claim in the Bankruptcy Court for the Eastern District of Virginia.
Mike Conway, the head of the New York Bankruptcy Group, said bankruptcy gives Koger breathing room.
"It really is going to bring the ultimate resolution to a head instead of this taking a substantial amount of time in resolving these HOA situations one by one," said Conway, who is not involved in the case. [Koger] is now going to come up with a managed solution."
The bankruptcy filing comes a week after a Circuit Court-appointed accountant reported that the missing funds from HOA accounts could be as high as $2.2 million, more than double the original estimate.
Eight months ago, company president Robert A. Koger reported to Fairfax police that about $800,000 was missing from HOA accounts. Court records implicate Koger's son and former employee Jeff Koger as the likely "primary culprit."
No one has been charged and the Fairfax police department continues to investigate alleged wrongdoing.
Depending on company assets, the amount of claims paid could be limited. A judge will decide how much each customer is paid if the assets don't cover the entire amount claimed, attorneys said. Koger has paid $113,000 in claims to date.
In March, Koger officials announced a sale to National Realty Partners, but the deal was canceled. Since then, Koger changed its name to Tri-State Management.
Attorney Pia Trigiani, whose practice is representing several of the affected HOAs, said attorneys are working together to defend their clients in what has become a challenging case.
"The record keeping is not very good," Trigiani said. "Information has not been forthcoming although those efforts have improved thanks to the monitoring agreement and the involvement of National Realty Partners, but that's no longer."
Robert Koger didn't return e-mails or phone calls yesterday. Thomas Gorman, his bankruptcy attorney, was out of the office.
A letter Koger mailed to clients July 27 states that he filed Chapter 11 because of "devastating" news coverage, lack of support from the court-appointed monitor and accountant and increasing legal costs. He plans to reorganize the business through Chapter 11.
"Many people faced with similar challenges would have thrown in the towel and moved on with life; however that is not my nature and I want to assure you that if any association has lost money, it will be refunded as soon as all claims are filed and insurance proceeds received," he wrote.
Dan Telvock: 540/374-5438|
Chapter 11 allows a debtor to reorganize or liquidate its business. A bankruptcy court will confirm the debtor's plan. Unless a trustee is serving, the debtor will remain in possession |