Whitbeck and Winrock Share Woes

by Arkansas Business Staff  on Monday, Jun. 30, 2008 12:00 am  

The news for ex-insurance executive Frank B. Whitbeck isn't getting better.

An assistant U.S. trustee recently filed a motion in Whitbeck's Winrock Grass Farm Inc.'s bankruptcy to have the case dismissed or converted from Chapter 11 reorganization to Chapter 7 liquidation.

The assistant trustee, Charles Tucker of Little Rock, blames Whitbeck of mismanaging the grass farm.

Between August 2007 and May 2008, Winrock had a net loss of $27,000, Tucker said in his motion. But during that period, Whitbeck paid himself $236,000 in salary.

"The losses of Winrock since the case has been reopened are directly and only attributable to the excessive salary paid to Whitbeck," Tucker said in the motion. "Such excessive salary to Whitbeck by a financially stressed company is indicative of waste and mismanagement, warranting appointment of a trustee."

One of Winrock's only remaining assets is a lawsuit it filed against Affiliated Real Estate Appraiser of Arkansas Inc. Also named as a defendant is Metropolitan National Bank of Little Rock.

In September 2003, Metropolitan sued to foreclose on the 811-acre grass farm in western Pulaski County. Winrock filed for Chapter 11 bankruptcy protection in August 2004 to save the farm. Whitbeck had hoped the grass farm would be used as the centerpiece to the company's reorganization because he believed the land was worth $14 million.

But Affiliated Real Estate Appraiser said the farm was only worth $2.8 million. As a result, the land was sold at an auction at the Pulaski County Courthouse for $4.55 million to real estate investor John W. "Jay" DeHaven. 

Affiliated has denied the allegations and the case is pending.

Winrock's bankruptcy attorneys could not be reached for comment. And the bankruptcy motion is pending.

If you remember, Whitbeck avoided a criminal trial in May by taking a plea agreement offered by federal prosecutors.

In exchange for pleading guilty to one count of mail fraud, Whitbeck didn't have to worry about three counts of making false statements to the Arkansas Insurance Department.

But he could face up to 20 years in prison and a $1 million fine when he's sentenced on Oct. 23.

 

 

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