Prebul bankruptcy filing reveals grim financials

Prebul bankruptcy filing reveals grim financials

July 16th, 2009 by Lauren Gregory in News

Joseph Prebul is losing $8,250 a month - and that's on top of existing debts of at least $22.5 million.

He has just $269 in cash on hand, and one of his checking accounts has only four cents in it.

That's the grim financial picture outlined in paperwork filed Wednesday in U.S. Bankruptcy Court in Chattanooga, a day after Mr. Prebul consented to a demand from his business creditors that he file for personal bankruptcy.

"We had various technical defenses that we felt we could raise but, in the end, there are likely to be so many deficiency judgments and suits against Mr. Prebul that we felt it best to go ahead and consent to the involuntary (petition for bankruptcy) brought on by some of his creditors," said Tom Ray, Mr. Prebul's attorney.

Mr. Prebul was arrested in February on federal wire fraud charges that are pending in U.S. District Court in New York. The longtime car dealer filed for bankruptcy protection for several of his Chattanooga and Dalton, Ga., stores the day after he was charged.

Jerrold Farinash, the Chattanooga attorney appointed to oversee the dealership bankruptcies, said he pushed for the personal bankruptcy filing to expedite liquidation of Mr. Prebul's businesses.

"I think having Mr. Prebul in bankruptcy will make closing some of the franchise sales easier to the extent the franchise purchasers are seeking to also purchase any of the dealership locations," Mr. Farinash said.

On a detailed list of Mr. Prebul's assets - which is itemized down to a golf club membership, Rolex and Cartier watches and even dogs, cats and fish - are some of his dealership properties. But he owes about $7.6 million on two car lots on Chapman Road and $457,707 on an Amnicola Highway property he rents out to an Ohio-based company called Cardinal Health, according to court documents.

He owes $853,222 on his Signal Mountain home on Brady Point Road, and the home's value is listed as "unknown" because it hasn't been appraised recently, according to Mr. Ray.

In fact, Mr. Ray said, several "unknown" values are listed under Mr. Prebul's assets, so it's unclear exactly how much he is worth.

His assets are listed at $241,083, but that's not including the value of several pieces of property, various business holdings and personal effects, the attorney said.

Many of Mr. Prebul's assets likely will be sold to pay debtors, according to Mr. Ray, but he probably won't lose his home or personal effects.

In the meantime, with his car dealerships up for sale, Mr. Prebul has turned to airplane sales for income. He is pulling in about $5,000 a month as a salesman for Star Avionics of Chattanooga and expects some additional sales commissions, court documents show.

At the same time, his average monthly expenses total $13,250, records show.

Mr. Prebul will be required to take a financial management class as part of his bankruptcy.

James Paris, the Chattanooga attorney appointed Wednesday to be Mr. Prebul's personal bankruptcy trustee, said he expects the case to be "pretty complicated" as various property values and debts are untangled.

"There's more to this than a typical bankruptcy," Mr. Paris said. "Ninety percent of the bankruptcy cases I handle have no assets."