Date: Thu, 24 Sep 1998 16:09:26 +0000 From: Darrell Todd Maurina Reply-To: Darrell128@aol.com Organization: Christian Renewal/United Reformed News Service Subject: NR 98091: IRM Management Resigns; Barnard to Become CEO NR #1998-091: IRM Management Resigns as General Partners; John Barnard to Become CEO of Troubled California Real Estate Firm Seeking to stave off a lawsuit initiated by three Christian Reformed agencies and the Barnabas Foundation, the founders of IRM Corporation have stepped down as general partners in the family-run business that accepted $228 million of investments from Christian Reformed agencies and individual investors, most but not all members of the Christian Reformed Church. John Barnard, a California attorney hired by IRM earlier this year at the insistence of the original creditors committee of denominational officials and major investors to provide outside supervision of the corporation's financial affairs, will be the interim chief executive officer of the corporation. The CRC lawsuit alleged gross financial improprieties by IRM management and sought the appointment of a bankruptcy trustee to take over day-to-day management of the company on the grounds that the management had engaged in a "Ponzi scheme" and could not be trusted. IRM had resisted the move, arguing that appointing a bankruptcy trustee would disrupt the business operations of the company and consume money that would otherwise go to investors. NR #1998-091: For Immediate Release: IRM Management Resigns as General Partners; John Barnard to Become CEO of Troubled California Real Estate Firm * Christian Reformed Church, Barnabas Foundation agree to postpone lawsuit on $228 million investment in IRM by Darrell Todd Maurina, Press Officer United Reformed News Service (September 24, 1998) URNS - Seeking to stave off a lawsuit initiated by three Christian Reformed agencies and the Barnabas Foundation, the founders of IRM Corporation have stepped down as general partners in the family-run business that accepted $228 million of investments from Christian Reformed agencies and individual investors, most but not all members of the Christian Reformed Church. John Barnard, a California attorney hired by IRM earlier this year at the insistence of the original creditors committee of denominational officials and major investors to provide outside supervision of the corporation's financial affairs, will be the interim chief executive officer of the corporation. The CRC lawsuit alleged gross financial improprieties by IRM management and sought the appointment of a bankruptcy trustee to take over day-to-day management of the company on the grounds that the management had engaged in a "Ponzi scheme" and could not be trusted. IRM had resisted the move, arguing that appointing a bankruptcy trustee would disrupt the business operations of the company and consume money that would otherwise go to investors. "We have asked the IRM principals to resign as general partners, they have done that," said Jay Mol, the largest individual IRM investor and chairman of the new court-appointed bankruptcy committee. "We have asked them to stay on as employees and John Barnard is the new executive officer." Ken Horjus, the CRC director of finance and administration and the CRC agencies' representative on the court-appointed creditors committee, was on vacation and could not be immediately reached for comment. CRC officials involved in IRM were expected to be in Sacramento for a major September 23 meeting of IRM investors with the creditors committee and the former IRM principals. Mol - who has been a strong critic of past actions of his denomination in the IRM matter - characterized the CRC agencies' response to the removal of the IRM principals as positive. "The reason we asked the principals to step aside is because we can now do so without damaging the operation to the detriment of the creditors, which was definitely ot the case before," said Mol. That didn't mean Mol appreciated the CRC agencies' activities on the former out-of-court creditors committee, where many votes ended on a 4-4 tie after the resignation of Bob den Dulk, former president of Westminster Theological Seminary in California. Den Dulk resigned from the committee at the end of March after it declined to purchase liability insurance for its members. The new 11-member court-appointed committee has only two representatives of organizations which filed the lawsuit - Horjus and Barnabas Foundation executive director Dave Vander Ploeg - but Mol said some of the previous committee's tensions were still evident. "It has not been smooth going; the agenda of the agencies persists," said Mol. "Do I think that will be able to be overcome? I do primarily because now we're under instructions from the court and some of the stonewalling will not be tolerated by the court." Mol declined to state specific examples of stonewalling on the former out-of-court committee. IRM senior vice president for client services David Buurma, one of the IRM principals and son-in-law of IRM founder John Van Hofwegen, said the family viewed the decision to give up management of IRM as disappointing but necessary. "In a sense it was a sad thing, but it was something we volunteered because we thought it would expedite the process, and it was one less thing to argue about," said Buurma. Buurma said he was now focusing more of his attention on such matters as his son, who will be taking a year to volunteer in Mexico assisting a missionary sent out by Christian Reformed World Missions - one of the agencies which is not suing IRM. "It just reminds me of what's really important," said Buurma. The new CEO of IRM said he wasn't sure how long he would be IRM's executive officer and noted that the US Bankruptcy Court for the Eastern District of California has the final say in whether he would be allowed to become more than the interim CEO. "[Horjus and Vander Ploeg] are pressing the rest of the committee to make a decision on having a longer term CEO," said John Barnard. "The committee is going to make a decision on who is acceptable to them." Barnard emphasized that the IRM principals could no longer be referred to as IRM management. "The four principals have given up their management power; I am now the management," said Barnard. "I still approve all the checks but that was the situation under the standstill agreement [negotiated by the original out-of-court creditors committee] until it expired, and now is the situation again." Barnard said that much of his day-to-day management work focused on directing the activities of the IRM bankruptcy attorneys but that he also had to manage day to day decisions on the business, subject to the authority of the bankruptcy court. The US Bankruptcy Court will next meet on September 28 to approve his role as interim CEO and approve the arrangement where the IRM principals remain on as employees, said Barnard. September 28 was the original day when the CRC lawsuit was to be heard by the court; that lawsuit has now been postponed to a later date by consent of both parties. Barnard said he was cautiously optimistic about the future of a sale for IRM that would recover some but not necessarily all money for the investors. "It is primarily the ability of the debtor companies and the committee to take advantage of the current favorable market conditions to take advantage of that for the investors," said Barnard. "Those conditions exist now, and how long they will exist is impossible to predict." The next major step for the court-appointed creditors committee will be to select a financial advising firm. The original committee had selected PriceWaterhouseCoopers LLP, whose accountant, Thomas Lumsden, reported that "it appears that the IRM management have created and perpetuated a real estate investment pyramid scheme," creating "a financing scheme involving investor money which could only be sustained through continued and ever-expanding loans from new and existing investors." "If the various parties can work cooperatively I will remain optimistic," said Barnard. "If there is still a lot of fighting it slows things down and things won't happen." Cross-References to Related Articles: #1998-006: Classis Chatham asks Top Christian Reformed Administrative Committee to Appoint Independent Investigators of $11.5 Million in Questionable Investments #1998-028: Classis Lake Erie Overtures Christian Reformed Synod to "Ensure the Editorial Freedom of the Banner" #1998-067: IRM Debate Extends Synodical Session #1998-068: Synod Responds to Possible Multimillion Dollar Fund Loss #1998-080: IRM Investment Debacle Leads to Litigation; Estimate of Funds at Risk Balloons from $11.4 to $228 Million #1998-083: IRM Declares Bankruptcy; CRC Files More Litigation Seeking Removal of IRM Management #1998-084: Bankruptcy Court Postpones Action on CRC Lawsuit to Remove IRM Management; "Concerned IRM Investors" Leader to Chair New Investors/Creditors Committee Contact List: Dr. Peter Borgdorff, Executive Director of Ministries, Christian Reformed Church 2850 Kalamazoo Ave. SE, Grand Rapids, MI 49560 O: (616) 246-0832 * H: (616) 957-3288 * E-Mail: borgdorp@crcna.org David Buurma, Senior Vice President for Client Services, IRM Corporation John Barnard, Consultant, IRM Corporation Office: 2151 Salvio St., Suite 325, Concord CA 94520 Mailing: PO Box 3000, Concord, CA 94522-3000 O: (925) 676-1966 * FAX: (925) 676-1744 Concerned IRM Investors c/o 7123 Brooklyn SE, Grand Rapids, MI 49508 Dr. David Engelhard, General Secretary, Christian Reformed Church in North America 2850 Kalamazoo Ave. SE, Grand Rapids, MI 49560 O: (616) 246-0744 * H: (616) 243-2418 * FAX: (616) 246-0834 * E-Mail: engelhad@crcna.org Ken Horjus, Director of Finance and Administration, Christian Reformed Church in North America 2850 Kalamazoo Ave. SE, Grand Rapids, MI 49560 O: (616) 224-5889 * FAX: (616) 224-5895 Jay Mol, Chairman, Creditors Committee O: (616) 669-8960 * FAX: (616) 669-5368 * E-Mail: jcmol@aol.com David Vander Ploeg, Executive Director, The Barnabas Foundation 15127 S. 73rd Ave., Suite G, Orland Park, IL 60462 O: (708) 532-3444 * FAX: (708) 532-1217 Michael Vanni, Secretary, Creditors Committee H: (415) 861-8091 * O: (415) 431-8747 * FAX: (415) 431-8758 ---------------------------------------------------------- file: /pub/resources/text/reformed/archive98: nr98-091.txt .