Carinalli asks creditors for 3-4 years

<p>Clem Carinalli, Sonoma County’s largest individual property owner, laid out a plan to repay lenders Tuesday at a meeting packed with his creditors, who ranged from retirees to bank representatives and the treasurer of Sonoma State University.</p><p>Carinalli presented a best and worst case scenario to more than 100 people gathered at Odd Fellows Hall in Santa Rosa, many clearly anxious to hear the plan to rescue their money.</p><p>If lenders agree to work with Carinalli they might be fully repaid in three to four years, Carinalli and his adviser told creditors, according to interviews with almost a dozen people who attended the closed-door meeting.</p><p>If they decline to accept his restructuring plan, Carinalli could be forced to enter bankruptcy and lenders were told they likely would be repaid significantly less because his properties would be liquidated near the bottom of the real estate market.</p><p>While many creditors seemed resigned to support Carinalli’s plan after emerging from the meeting, the fallout has left some of their finances in tatters.</p><p>“It’s really hurting me,” said Bob Huppert, a 79-year-old Santa Rosa resident who invested his retirement money with Carinalli and attended Tuesday’s meeting.</p><p>Without the monthly payments from Carinalli, Huppert is struggling to pay his bills.</p><p>“I put my house up for sale. I’m hoping to go into a mobile home. But it’s a lousy time to sell a house,” he said.</p><p>Carinalli would not comment for this story and declined a request by The Press Democrat to attend the private meeting.</p><p>A partial picture emerged Tuesday of who is getting paid — and who is not — as Carinalli struggles to hold onto a real estate empire valued at $65 million on county tax rolls.</p><p>Unsecured lenders, mostly private individuals such as Huppert who cannot foreclose on Carinalli’s property, are no longer receiving monthly interest payments, said Steve Huntley, a debt restructuring specialist hired by Carinalli.</p><p>Carinalli has continued to make regular payments to some secured creditors, who have legal rights to seize his property if he defaults, Huntley said.</p><p>These secured lenders, such as Exchange Bank, continue to receive payments from Carinalli because their loans were invested in property that is still generating positive cash flow, Huntley said.</p><p>“These secured lenders are fine,” Huntley said.</p><p>Other secured lenders have been notified they will not receive payments because Carinalli used their loans to invest in projects that are not currently profitable.</p><p>The Sonoma State University Foundation, a nonprofit agency that invests money donated to the university, said it was notified that Carinalli intends to stop making monthly payments on its secured loan.</p><p>“Likely, we will stop getting payments,” said Bill Ingels, Sonoma State’s treasurer who attended the meeting as a representative of the foundation.</p><p>Ingels declined to say how much money the university’s foundation loaned to Carinalli. The foundation has continued to receive interest payments, despite the letter from Carinalli.</p><p>Like other lenders who attended, Ingels agreed that forcing Carinalli to sell his properties near the bottom of the real estate market was not a good idea.</p><p>“I don’t think anyone wins with bankruptcy,” he said.</p><p>Carinalli showed lenders Tuesday a large pool of real estate he planned to sell in three to four years in order to pay them back. It totalled nearly 200 properties.</p><p>By waiting until the market improves, Carinalli will have more money to repay lenders and retain more property for himself, Huntley said.</p><p>Carinalli and Huntley will be meeting individually with investors during the next 45 days to discuss the particulars of every loan, Huntley said.</p><p>“The situation with secured loans is on a case-by-case basis,” Huntley said. “With some secured lenders, everything is fine. But there are some secured lenders where, no, it doesn’t work and the loan needs to be renegotiated.”</p><p>The general mood of the meeting was supportive of Carinalli and his plan, with some concern that he is not currently making payments to some lenders.</p><p>“I’ve known Clem for 44 years,” said Larry Bertolone. “I have total confidence in his ability and his ethics.”</p><p>Others echoed that sentiment.</p><p>“I think he’s got the support of the community,” said Julia Mattos, a Rio Vista resident who attended with her husband Joe.</p><p>Norene Losee, a Santa Rosa resident, agreed he had community support, but still expressed dismay.</p><p>“I’m really not happy with him,” Losee said. “Nobody is happy until they get paid.”</p><p>Huppert, who has to sell his house and move into a mobile home park, said he was confident in Carinalli’s ability to eventually recover.</p><p>“I got faith in Clem. He’s honest. And he’s trying. He didn’t walk away from it,” Huppert said. “It’s one of those ‘take what you can get’ situations.”</p>