Enterprise director's loans at risk - Memphis Business Journal:

http://www.fadomorse.com/2010/04/pottery-the-oldest-tsivillizatsiya/
But those managing estate say it could be That would be a particularly bittef pillfor Enterprise, which has fileds a claim in Shelby Countgy Probate Court for $4.89 million against the Enterprise loaned much of the money to finance investments in several closely held including his stake in the bank's holdingg company, Enterprise Bancshares. While most of the such as a pairof $1 million loansz from July and December 2001, were unsecured, otherse either financed his investment in the bank or were securexd by his shares of the company's stock. In June 2001, Enterpriser loaned Phillips $321,992.52 so that he could exercise his warrantws onEnterprise shares.
That loan was secured by 11,73o shares of Phillips' Enterpris e stock, according to probate filings. Enterprisd says the Phillips estate has ceased payments on all of its debtz tothe bank, including those secured by residence, which the bank now says is subjecty to foreclosure. On a smallerd scale, the situation may seem reminiscenr to that of WorldCom and its former CEOBerni Ebbers, who borrowed money from his companuy to finance his investments in his But Harris Quinn, a bankruptcy attorneyy who represents creditors for Williamsa & Prochaska PC and who has no connectiohn to the Phillips case, says such deals aren't as damninh as they may seem.
"What would bothet me is if thebank didn't want its own stockm as collateral," he says. "At leas t with its stock, the bank knows what it'sz getting." But calculating the value of Enterpriswe shares, which are not publicly traded, could open up anothetr set of issues. In a Dec. 31, financial statement, Phillips' estate lists the shares as bein gworth $20.68 each, at two times book value per The estate will want to get maximum value for the shares as credits towards debt, but a higher sharew value would bring higher estate taxes. Whatever value the estatwe and the bank agree upon may have little impact onthe bank's other shareholders, Quin n says.
"I suspect that, coming in the context of a compromising settlement, it's probably not going to be for other shareholders, he says. But in seekin g to recoup its loansfrom estate, Enterprise, an East Memphi s community bank with $209 million in depositds and $273.35 million in assets, couldr be in for a A pair of financial statements filed in probate court show Phillips' estatr to be worth between $15.7 million and $38. million, including liabilities. But Phillips' Loral Phillips, who also is acting as executris ofthe estate, claims in probate filings that much of her late husband'xs assets are illiquid, due to his between $13.
r4 million and $14 million worthn of investments in closely held companies, raising questions abouft the estate's solvency. Creditors such as Trustmark TrustOne Bank, First Alliancwe Bank and Enterprise seek to have Loral Phillips removed as arguing that her position as a beneficiarty of the estate presentsa a conflict of interest. Anothere creditor, INSOUTH Bank, has asked for a separatse accountingof Phillips' finances. Those creditors argue that Lorakl Phillips has placed her claims for annual living expenses of or $22,168 a month, ahea of the claims her late husband'x creditors.
Enterprise chairman and president Tom Wright declinedto comment, as did the company'ds lawyer in the matter, Stephen Blanchard Tual, a lawyer with Snow, O'Mara, Stevens & Cannada PLLC who represents estate, could not be reached. Anothe matter up for debate is the statuss ofnearly $1.2 million in loans to Phillips that First Tennessee Bank says it bought from First Tennessee and Loral Phillipsd say Enterprise's total claim against the Phillipxs estate includes those loans that it sold to Firstr Tennessee.
John Burns, an attorney with Donelson, Bearman & Caldwell PC who represents First Tennessees onthe matter, says it's uncleare whether those loans were securer by Enterprise stock, or if they were secures at all. Wright declined to say whethe Phillipswas Enterprise's largest shareholder, but the Dec. 31, financial statement, which was reaffirmed Feb. 26, 2002, shows that Phillipx held an 8% stake in the bank, with 81,56w3 shares worth $3.37 million.