Centrix Financial filed for bankruptcy on Tuesday and disclosed that it has cut another roughly 100 jobs in recent weeks.
Centennial-based Centrix made the Chapter 11 filing four days after three creditors initiated an involuntary petition for the company, which was the title sponsor of the Grand Prix of Denver from 2003 to 2005
The company made the Chapter 11 filing in a bankruptcy court in Nevada instead of Colorado, where the bulk of the company’s employees are based, which raised questions from bankruptcy attorneys.
Centrix cited an ongoing bankruptcy case in Reno as the reason for the location of its filing. CMGN, a Centrix subsidiary, filed Chapter 11 bankruptcy in Reno Sept. 4. The filing, however, came just three months after CMGN was created in June, according to a filing by the creditors.
Centrix’s struggles started last summer and the company has gone through several rounds of layoffs since then.
“It appears that the filing of the CMGN case was done in an attempt to gain venue in Nevada for subsequent filings by Centrix and related entities in the state of Nevada, far away from creditors and lawsuits facing Centrix,” according to a filing made by an attorney for the creditors in U.S. Bankruptcy Court in Denver.
“The timing is a bit suspect,” said Greenwood Village-based bankruptcy attorney Jon Clarke, who is not involved in the case. “The ink is hardly dry on the incorporation papers.”
Centrix’s filing states the company has between 200 and 999 creditors and has more than $100 million in assets and debt.
Centrix, which is in the subprime auto-loan business, said in a statement that the bankruptcy filing is part of a previously announced sale of the firm to a group of investors that include chief executive and principal owner Robert Sutton.
Steve Gray, a spokesman for Sutton, declined comment and referred questions to Centrix spokeswoman Lauren Baker. Baker declined comment beyond the statement.
Centrix argues in a filing in the CMGN case that the company’s business isn’t located in one jurisdiction because its loan business is conducted nationwide in almost every state.
The filing also reveals that one of the companies in the investor group has agreed to give Centrix $5 million in financing as part of the sale agreement.
Since the summer of 2005, the company’s business hit a severe downtown after 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. Centrix received a large portion of its business from credit-union customers.
Centrix employs about 400 people, down from 1,500 about a year ago.
Staff writer Andy Vuong can be reached at 303-954-1209 or avuong@denverpost.com.
This story has been corrected in this online archive. Originally, due to a reporting error, it had the wrong timeframe for the bankruptcy filing. It should have said Centrix Financial’s bankruptcy filing came four days after a group of creditors intiated an involuntary petition for the company.
