Creditors are expected to meet Jan. 27 in U.S. Bankruptcy Court here to confront Cleveland, Tenn., businessman Steve A. "Toby" McKenzie, who owes them more than $150 million.
Mr. McKenzie, who once donated $3 million for the completion of McKenzie Arena at the University of Tennessee at Chattanooga, appeared in good spirits Thursday in Bankruptcy Court in Chattanooga despite an involuntary bankruptcy petition filed against him in November 2008 by several banks.
It was that petition, his lawyer says, that led the businessman to file for Chapter 11 bankruptcy just before Christmas.
The move acknowledged Mr. McKenzie's full-blown financial crisis, now marked by his admitted inability to pay back more than $150 million owed mostly to banks across the nation.
At Thursday's hearing, lawyers for the various creditors and Mr. McKenzie's attorney Kyle Weems agreed to consolidate the involuntary and Chapter 11 bankruptcy proceedings into one case.
While waiting for the hearing to begin Thursday, Mr. McKenzie sipped on a Dr Pepper and reminisced about the check-cashing business he started in 1994 that grew into more than 300 locations nationwide and would garner him millions. He now has ownership in 118 separate limited liability companies that deal in everything from construction to real estate, records show.
Mr. McKenzie spoke mostly off the record and declined to comment specifically on the conditions that led him to file for bankruptcy. He would say only that nothing he has ever done has been "embarrassing."
"None of my business dealings have been unjustified," Mr. McKenzie said.
One creditor in the bankruptcy is the private Chattanooga law firm of Grant, Konvalinka and Harrison, which is owed $385,000, according to court documents. Mr. McKenzie owes the largest single amount - $15 million - to Green Bank of Knoxville.
Mr. Weems said recently that he fully expects the Chapter 11 bankruptcy to "reorganize" Mr. McKenzie's businesses. The bankruptcy will allow the millionaire to regain ground in the wake of a bad real estate market that has played a significant role in contributing to Mr. McKenzie's financial troubles, Mr. Weems said.
Indications of Mr. McKenzie's financial woes surfaced late last year.
In October, a Georgia federal court ordered that the businessman and some of his business partners, all named together in a lawsuit, immediately had to make good on about $11.5 million in lease payments on which they had defaulted almost a year earlier.
"Given the substantial sums owed under the contracts in this case and the defendants' spotty payment history, (the creditor) certainly has reason to doubt the long-term solvency of the defendants," stated the judge's order, filed in U.S. District Court in Columbus, Ga