Three creditors of Centrix Financial have initiated a bankruptcy filing for the former title sponsor of the Grand Prix of Denver, claiming they are owed more than $4.6 million.
IFC Credit Corp, Suntrust Leasing and Wells Fargo Equipment Finance initiated the Chapter 11 filing for Centrix in U.S. Bankruptcy Court in Denver.
The companies, which leased equipment, software and other products to Centrix, have not been paid for “a number of months,” said Lee Kutner, an attorney for the creditors.
IFC and Suntrust say they are each owed roughly $2.15 million and Wells Fargo says it is owed $345,000.
Centennial-based Centrix has 20 days to respond to the bankruptcy filing, which was made Friday.
“The action taken by these creditors is unfortunate given the previously announced steps Centrix is taking toward a proposed sale of the company,” Centrix spokeswoman Lauren Baker said Monday. She declined further comment.
A judge still needs to approve the petition. Centrix, which provides auto loans to subprime borrowers, could also initiate its own bankruptcy filing.
The company has struggled financially over the past year, cutting its workforce from 1,500 to 500.
Last week, Centrix announced that a group of investors that include chief executive Robert Sutton has agreed to purchase the company. Financial terms of that sale, expected to close in November, haven’t been disclosed.
The group also includes private-equity firm Falcon Investment Advisors and insurance company Everest Reinsurance Holdings. Falcon has been Centrix’s senior lender since January, and Everest provides insurance for loans serviced by Centrix.
The potential sale to insiders “bears some need for investigation,” Kutner said Monday.
Sutton, the current principal stakeholder of Centrix, will become a minority owner once the sale is completed, said Steve Gray, a spokesman for Sutton.
“His role with the company moving forward is in an advisory role to the new management team,” Gray said.
Sutton, a racing enthusiast, is also a co-owner of the Grand Prix of Denver.
Centrix is facing several lawsuits, including one alleging fraud filed in Arapahoe County by a group of initial investors. The company also faces a class-action suit in Missouri.
Centrix has attributed its struggles to tighter regulations. Last summer, the National Credit Union Administration cautioned credit unions – whose accounts it guarantees – about using third-party intermediaries such as Centrix to provide loans to borrowers with impaired credit ratings.
The company received a significant chunk of its business from credit-union customers.
Centrix posted net earnings of nearly $14 million during the first half of 2005, before the warning was issued, Centrix vice president and controller Mark Oleksik said in an April deposition in the class-action suit. The company posted a net loss of about $35 million during the second half of 2005 after business from credit unions dried up, Oleksik said. The company had a net loss of $21.8 million for the entire year.
Staff writer Andy Vuong can be reached at 303-954-1209 or avuong@denverpost.com.
