Property transfers on 'eve of bankruptcy' said to be improper
SANTA ROSA -- A financier of properties involved in the $32 million U.S. Bankruptcy Court reorganization of four companies connected to real estate developer-turned-vintner Dinesh Maniar claims the properties were improperly transferred into a "shell corporation" declared defunct just before a foreclosure sale.
Hartford Life Inc. alleges the Sept. 14 petition for Chapter 11 reorganization for Mr. Maniar's Diamond Oaks Vineyards Inc. was filed in "bad faith and in an attempt to delay, hinder and defraud Hartford." Since July, Chapter 11 petitions also were filed for other companies with ownership ties to Mr. Maniar, Montgomery Realty Group investment companies and racehorse business Southland Thoroughbred Farms.
The Diamond Oaks reorganization filing – listing $26.8 million in assets and $13.7 million in liabilities – brought an automatic stay of the foreclosures. Hartford wants the court to lift this protection for the properties in question to continue the foreclosures.
"Debtor can show no good faith business reason for the transfer of the properties on the eve of bankruptcy," wrote one of the carrier's attorneys in the case, Stacy Harrison of Bingham McCutchen in Santa Monica in the court filing.
In court documents, she pointed to the reorganization filing coming a day before the scheduled foreclosure sales, Mr. Maniar personally owning the properties until transferring them to Diamond Oaks on Sept. 10, allegedly without lender permission, and that Diamond Oaks didn't have assets or revenue before the September transfers of those properties and one in Alexander Valley.
Hartford refinanced the Calistoga properties in February 2007, issuing $8.8 million in initially interest-only notes to Mr. Maniar rather than Diamond Oaks, according to court documents. Hartford claims Mr. Maniar defaulted in February of this year, leading to notices of default on May 13 and trustee sales initially set for Sept. 10 and 15.
Mr. Maniar's attorney in the matter, David Chandler of Santa Rosa, didn't return a call for comment.
James Graeb, an attorney working with Mr. Maniar's ventures, testified at the Oct. 23 court creditors meeting that Diamond Oaks had an "equitable" interest in the Calistoga and Cloverdale properties that Mr. Maniar was "perfecting" with the September ownership transfers, according to a court document.
Mr. Graeb reportedly testified at the meeting that Mr. Maniar also personally owned Carneros and Chalk Hill district vineyards, which were listed in Diamond Oaks filings as originally being corporate holdings. The vineyards were sold for $6.08 million apiece to Silverado Vineyards LLC in the past two years, with $700,000 in proceeds going to Mr. Maniar, according to court testimony.
A hearing on Hartford Life's motion is set for 10 a.m. Dec. 10 in U.S. Bankruptcy Court in Santa Rosa
