Hertel debt at $100M, Fowler says
The business empire controlled by developers Ron Hertel and Bob Fowler racked up $100 million in debts, acquiring five aircraft, a boat, a horse ranch and vineyards before it collapsed last year amid a mountain of real estate-related liabilities.
At a hearing in the Santa Barbara office of the U.S. Trustee on July 24, Fowler and Hertel described a sprawling web of business entities related to Ventura-based R.W. Hertel & Sons. The company was forced into an involuntary Chapter 7 bankruptcy in January.
The trustee is trying to determine what assets the company might own so that creditors can be repaid. About $2.8 million in claims have been filed so far.
Hertel and Fowler testified that most of the units that held their assets weren’t owned by R.W. Hertel & Sons but rather controlled by them personally, including a vineyard venture, two charter flight businesses and a horse breeding ranch, which Fowler didn’t have an interest in. The two said that they pumped money from their own personal accounts to keep R.W. Hertel & Sons afloat during its last few years and that it technically owes them about $7 million each.
Fowler said under oath that he has signed personal guarantees on as much as $100 million in debt related to businesses he and Hertel controlled. In an interview after the hearing, Fowler said he doesn’t know the value of what little remains and that his personal wealth has been devastated.
“We were holding the land component of all these properties, and that’s where the value all fell out,” Fowler said. “And that’s where my net worth was.”
During the hearing, U.S. Bankruptcy Trustee Sandra McBeth grilled the two on transfers to and from R.W. Hertel & Sons’ bank account throughout 2008, some of which were nearly $500,000.
“Where was R.W. Hertel & Sons getting its money?” McBeth asked.
“R.W. Hertel & Sons was getting it from Bob and I,” Hertel answered. “As far as the setup of where money was going or how it was used, Bob and I weren’t always involved in it unless it was a large amount.”
In an interview after the hearing, Fowler said all of the five planes he and Hertel’s companies once owned have been sold or taken back by creditors.
“Anything that was left over went to us, and we put it back into [R.W. Hertel & Sons],” Fowler said.
•For more coverage of the R.W. Hertel & Sons bankruptcy, see the Aug. 7 edition of the Business Times.