Saddled with millions of dollars in debt, Cleveland, Tenn., business pioneer Steve A. “Toby” McKenzie is in danger of losing his home.
A bankruptcy court hearing scheduled for Aug. 18 is expected to determine if First Tennessee Bank, which carries the mortgage on his primary residence on Bentley Park Drive in Cleveland, will be allowed to foreclose on the property.
Documents indicate that Mr. McKenzie still owes about $167,000 on the $521,000 home and that the bank has put off several hearings to settle the matter since the first of the year.
The Bank of Cleveland also is expected at the hearing to ask the bankruptcy judge to allow it to foreclose on a second home on Rambling Rose Drive in Ooltewah. Mr. McKenzie still owes about $555,000 on that home, documents show.
These latest developments in the complicated bankruptcy case are the most direct blow to Mr. McKenzie since the shock last December that the local self-made man owed about $200 million to about 40 creditors nationwide.
Mr. McKenzie earlier this year admitted he couldn’t pay his debts, but confidently defended his business choices.
“None of my business dealings have been unjustified,” Mr. McKenzie said in January.
On Thursday, Kyle Weems, Mr. McKenzie’s bankruptcy attorney, said foreclosure on both residences seems inevitable. The bankruptcy case has come down to trying to save Mr. McKenzie’s personal belongings in his home such as furniture and other valuables, Mr. Weems said.
“I believe the law is on our side in that regard,” Mr. Weems said.
According to bankruptcy laws, creditors generally cannot go after “tangible personal property” such as household items when the items are owned jointly with one’s spouse.
Mr. Weems said in January there were high hopes the economy would stabilize and that a Chapter 11 reorganization would help Mr. McKenzie salvage his numerous failing business ventures and real estate investments.
But Mr. Weems said Thursday that the Chapter 11 case has since turned into one of “liquidation,” meaning that the court-appointed trustee now is in the process of simply trying to sell off the businessman’s assets with the goal of breaking even on his massive debt.
“I’m sorry to say the real-estate market remains severely depressed,” Mr. Weems said. “We haven’t been able to make headway.”
Mr. McKenzie grew up in poverty, eventually pioneering the national check cashing and pay-day loan industry in the early 1990s. He sold the business and became a multimillionaire.
He followed his success with a dedication to philanthropy, donating more than $20 million over the years to the University of Tennessee and getting his name plastered on buildings such the McKenzie Arena on the campus of the University of Tennessee at Chattanooga.