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VC/

PRESENTS A
TRUNK SHOW

Unfulfilled Pledges

AMY KAHN RUSSELL

ONE-OF-A-KIND JEWELRY

LoanGiant.com's Chapter 11 filing

AMY KAHN RUSSEL IS THE FORERUNNER

affects Federation campaign.

IN A

NATURALISTIC TREND IN JEWELRY

Harry Kirsbaum
Staff Writer

hen World Wide
Financial Services
Inc., better known as
LoanGiant.com filed for Chapter
11 relief in U.S. Bankruptcy
Court in Detroit on Oct. 4, it list-
ed the Jewish Federation of
Metropolitan Detroit as one of its
creditors.
LoanGiant did not pay pledges
totaling $181,500 to Federation's
2003 and 2004 Annual
Campaigns.
According to Dorothy Benyas,
Federation chief financial officer,
the amount may be absorbed
into what is known as shrinkage
reserve.
"When we allocate
all of our campaign
dollars, we take 2.5
percent off the top
and reserve it as
uncollectable," said
Benyas.
In 2003, the reserve
was $1.02 million; in
2004, it was $909,750. Benyas
Benyas-said a
Federation receivables
committee will review the com-
pany's balance and decide how to
proceed. In general, Federation
could write off bad balances,
pursue payment through the
principals, or make payment
arrangements with the donors.
"Whatever decision we make
about a balance, we always do it
in consultation with the donor,
and it's certainly what we'll do in
this case Benyas said.
Nonpayment of a pledge hap-
pens usually because the donor's
financial circumstances have
changed, she said, but bankrupt-
cy is very unusual.
LoanGiant, a Southfield-based
company, has been involved in
lawsuits filed by creditors.
According to a Oct. 10 story in
Grain's Detroit Business,
LoanGiant was cited last year by
the state of Michigan for partici-

W

zig

October 20 2005

pating in allegedly fraudulent
mortgage loan and documenta-
tion practices, including improp-
erly qualifying loans.
In the bankruptcy filing, the
company lists GMAC/Residential
Funding Corp. as a $21.7-million
creditor. Also in the filing,
LoanGiant estimated its assets as
being between $1 million and
$10 million and estimated its
debts between $10 million and
$50 million.
Jack Wolfe, the company's CEO,
said the company fully intends to
pay all its obligations, including
Federation pledges.
"We're disappointed; we had
every intention of trying to find a
way to operate ourselves out of
the difficulties so that
we can meet not only
the pledge that we
made to Federation,
but to all our credi- .
tors," said Wolfe. "We
intend, through our
reorganization, to find
the best possible plan
to not only meet the
obligations of the
-
pledge, but all our
other creditors."
He called the adding of the
Federation pledge into the bank-
ruptcy filing "highly unusual."
"I didn't want to do it off a bal-
ance sheet, so to speak': he said.
"By making it as part of the
bankruptcy, I can find a way to
schedule them in to get it paid?'
Lynn Brimer, a partner at
Raymond & Prokop P.C. of
Southfield, which represents
LoanGiant in -the bankruptcy
proceedings, said LoanGiant's
action is "somewhat out of the
ordinary.
"You schedule those obliga-
tions that you consider to be debt
or obligations of the company:'
she said. "And [LoanGiant] felt
that its pledge to Jewish
Federation was, in fact, some-
thing that it carried on its books
as a legitimate debt?' ❑

MONDAY,
OCTOBER 24

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OCTOBER 29

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