Personal bankruptcy for Prebul?

Personal bankruptcy for Prebul?

July 1st, 2009 by Lauren Gregory in News

PDF: Prebul bankruptcy

Joseph Prebul's creditors want their money back, and they're trying to force the Prebul AutoGroup owner into personal bankruptcy to get it.

Four and a half months after Mr. Prebul declared bankruptcies on his Chattanooga and Dalton, Ga., car dealerships - a follow-up to his Feb. 10 arrest on federal wire fraud charges - creditors have filed a petition for involuntary bankruptcy of the Signal Mountain resident himself.

"No one has investigated his finances personally, and we felt like it would be appropriate for him to be in bankruptcy," said Jerrold Farinash, the local attorney who has been appointed trustee of the dealership bankruptcies, which are ongoing in U.S. Bankruptcy Court in Chattanooga.

The exact amount of Mr. Prebul's debt - or Prebul AutoGroup's debt - is unclear. Danny Bensusan of New York, Mr. Prebul's brother-in-law and alleged fraud victim, says the longtime car dealer took $7 million from him and used it for personal and business expenses.

Other claims against Mr. Prebul's local auto empire range from $1 million to more than $10 million, records show. An independent analysis of court documents by the Chattanooga Times Free Press in April showed Prebul AutoGroup may owe more than $40 million if all the claims filed in court pan out.

Until now, Mr. Prebul has avoided a personal bankruptcy filing - and therefore has been able to keep his individual financial holdings under wraps.

He has until July 20 to respond to the creditors' petition, according to his attorney, Tom Ray of Chattanooga. If Mr. Prebul agrees to declare bankruptcy, he'll ultimately have to file personal financial reports, Mr. Ray said.

But Mr. Prebul has yet to make a decision on how he'll proceed, according to Mr. Ray.

"Joe is very disappointed that he has not had an opportunity to try to work things out for his creditors and is undecided as to whether to resist the filing or consent to it," the attorney said.

Either way, the new filing has slowed any and every legal proceeding filed against Mr. Prebul personally, according to Mr. Ray.

That includes a lawsuit in Hamilton County Chancery Court in which FSG Bank, one of the AutoGroup's main creditors, alleges Mr. Prebul backed some of his dealership loans himself and is now in default more than $1.7 million.

The interference was by design, according to Mr. Farinash, who said he wanted to "put all of (Prebul AutoGroup's) creditors on an even plane" before FSG Bank was awarded a settlement.

Shelley Rucker, the Chattanooga attorney representing the bank in those proceedings, was out of the office Tuesday and unavailable for comment.