Carinalli to lay out payment plan

<p>Clem Carinalli, Sonoma County’s largest individual land owner, will meet with creditors Tuesday to unveil a plan to repay dozens of lenders and avoid bankruptcy in the midst of a severe downturn in the real estate market.</p><p>“The purpose of the meeting is to explain my current circumstances,” Carinalli said in a letter sent to creditors informing them of Tuesday’s meeting. “All lenders are invited — banks, individuals and anyone else to whom I owe money.”</p><p>Carinalli intends to outline the depth of his financial problems Tuesday and lay out a plan to restructure his debt. If lenders are unwilling to work with him, then Carinalli might have to seek bankruptcy protection and liquidate his assets, said Steve Huntley, who was hired by Carinalli to negotiate the restructuring plan with lenders.</p><p>“This is a way for everyone to hear everything at the same time,” said Huntley, a partner at Huntley, Mullaney, Spargo & Sullivan, a Roseville firm that has worked with Sears, Delco Homes, Boston Market and many other cash-strapped businesses.</p><p>Carinalli and Huntley denied requests by The Press Democrat for admission to the private meeting.</p><p>This spring, Carinalli stopped paying some creditors. In a letter sent to lenders in May, Carinalli said his real estate investments no longer generated enough cash to make regular payments on some loans.</p><p>Carinalli was both investor and developer of land projects, and is a central player in Sonoma County’s real estate world. He and his wife own property valued at $65 million on county tax rolls.</p><p>He borrowed tens of millions of dollars to fund his projects, while at the same time loaning millions of dollars to other aspiring developers. As property values went down and vacancy rates at his office buildings and retail centers went up, Carinalli became unable to stay current with bills, according to people familiar with his finances.</p><p>In the letter, Carinalli said he intends to treat all lenders equally and will attempt to repay them in full.</p><p>“I hope to satisfy my debts in an organized and fair manner, with all lenders receiving equal treatment and, hopefully, full payment over time,” Carinalli said in the letter.</p><p>While Carinalli has stopped paying some creditors, he has continued to pay others, including Exchange Bank, which loaned Carinalli $3.6 million in October. The loan is secured with a deed of title on a Mendocino Avenue retail building that houses Community Market, The Last Record Store and Govinda’s Restaurant.</p><p>Exchange Bank was not invited to Tuesday’s meeting, according to a senior bank official.</p><p>“We don’t have any knowledge of the meeting with Clem tomorrow (Tuesday),” Tony Ghisla, the bank’s chief lending officer, said Monday. “We don’t know anything about it.”</p><p>Exchange Bank should have been invited to the meeting, Huntley said Monday. If the bank did not receive an invitation, it was an oversight, he said.</p><p>Carinalli left open the possibility he will file for bankruptcy, saying in the letter he will discuss the liquidation plan “that will result if we are unsuccessful in reaching agreement with my lenders.”</p><p>If Carinalli is forced to file bankruptcy and sell his real estate assets in the current depressed market, it could potentially leave less money for lenders to divvy up, Huntley said.</p><p>“Some of this stuff sounds pretty technical, but it’s really pretty simple. I think these people will understand, and they will do what is best for them,” Huntley said.</p><p>Following Tuesday’s meeting, Carinalli and Huntley plan to meet with about 50 of his lenders during the next 45 days, Huntley said.</p><p>“We’re trying to provide them with information to make an informed decision,” he said.</p><p>The meeting is being held at 10 a.m. Tuesday at Odd Fellows Hall, 545 Pacific Ave. in Santa Rosa.</p>