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Onetime No. 2 agency brought down by debt, severe market downturnSAN RAFAEL -- Orion Partners, once the North Bay's second largest commercial real estate brokerage with a string of market-topping deals in its 15-year history, is in receivership to pay more than $500,000 in bank debt, its headquarters has been taken back by the landlord and former agents have gone to court for unpaid commissions.

On March 8, 16 agents from the San Rafael and Santa Rosa offices joined Santa Clara-based Cornish & Carey Commercial in Larkspur and Santa Rosa offices. Orion's San Rafael office closed around the same time, and Cornish & Carey now occupies the Santa Rosa office.

While market activity slowed, Orion amassed debt and missed payments, according to Marin County court records. The global credit crunch and rapidly contracting businesses evaporated sales deals and virtually shut off the spigot on leases until late last year, resulting in what a number of commercial real estate agents have said was the worst income year in their careers.

Marin County Superior Court judge James Ritchie on April 15 ordered receiver Rajiv Parikh to take possession of Orion's assets, largely revenue from listings and transactions, to pay off a $550,000 Wells Fargo Bank line of credit, $25,000 term loan from the bank and a $6,400 Wells Fargo business credit card balance, according to documents.

Due on the credit line, opened in June of last year and due in mid-October, were nearly $475,000 in principal and almost $14,000 in interest.

Orion defaulted on the term loan, opened in August 2008, with a balance of $13,346 in principal, $179 in interest and $39 in late fees as of early April, according to Wells Fargo's court complaint.

Besphil & Co., the owner of 899 Northgate Drive, where Orion occupied fifth-floor offices, sued the brokerage in Marin County Superior Court on March 3 for $23,193 in past-due rent and $7,624. The court allowed Besphil to take back the space March 23.

Orion's financial troubles had been building for some time, according to several industry professionals closely involved with the company. A severe slowdown in market activity in the past two years, particularly last year, compounded a situation in which agents interested in getting a share of company profits as well as transaction commissions weren't getting either.

"They were promised a share of the profits," said Basil Plastiras, a San Rafael real estate attorney and broker who formed Orion with Bill and Susan McCubbin in 1996. "That's why we called it Orion Partners."

Mr. McCubbin, president and chief executive officer of Orion, declined to comment for this story, other than to say that Wells Fargo was in control of the company now.

[caption id="attachment_21956" align="alignleft" width="130" caption="Bill McCubbin"][/caption]

In 2004, Mr. McCubbin, president and chief executive officer, was quoted as saying the goal of Orion Partners was to be agent-owned and share profits. The brokerage started when Mr. McCubbin's role as manager of Grubb & Ellis' San Rafael office ended. Ten Grubb & Ellis agents followed him to start a new brokerage to compete with Keegan & Coppin, which was then and continues to be the North Bay's largest commercial real estate brokerage.

At one time, Orion had four offices, including a satellite in Petaluma and a contract office with Frank Howard Allen Realtors in Sonoma.

Mr. Plastiras sold his share in Orion to the McCubbins in 2001, but has remained connected to Orion, which has been handling leasing for Parkway Properties investments. The troubles at Orion first became public when four agents left in late January to join Parkway and then all but Martin Perlmutter went to Cornish & Carey.

Mr. Perlmutter, who was one of the first Orion agents, sued the brokerage Feb. 22 in Marin County Small Claims Court for $717 in commissions and won a judgment on April 16.

Connie Bradley, who joined Orion's Santa Rosa office in 2002 and was part of the agent shift to Cornish & Carey, sued Orion on April 9 for $7,100 in commissions for two transactions closed and paid to Orion before she left. The court awarded her that much on June 4.

"It's challenging to make money in today's marketplace as it is, and when you're not getting commissions payments, it is even harder," she said last week.

She and other former Orion agents noted that the winding down of Orion is a delicate subject for a close-knit market such as the North Bay.

At the time of Wells Fargo's lawsuit on April 13, the bank figured the revenue potential to pay its claim and those of other creditors could be $786,150 from contracts for 32 leases and one sale, with potential for another six deals potentially bringing in nearly $147,000, according to documents.

"We hope there are more receivables than what is being claimed," Mr. Parikh said last week.

He's looking in particular at listings and deals dating back to late 2009.

However, the troublesome situation for some North Bay companies in financing capital expenditures could whittle that revenue potential, as a local company close to making the largest of the listed lease deals, worth $400,000, has encountered hurdles, according to Mr. Plastiras.

And a number of former Orion agents as well as those on the other side of transactions connected to Orion have described challenges closing deals in the past several months because of disputes on whether commissions go to the Orion agents or into the receivables pool to satisfy the Wells Fargo debt.

"I don't feel my part of the story is over yet," Ms. Bradley said. "There are still outstanding transactions that Orion Partners was party to."

Other Marin County small claims court judgments against Orion in the past few months were $2,045 for San Rafael business license fees and $2,400 for Novato signmaker Turbo Express owner Frank Janisen.