Money Tree files bankruptcy; company impacted by economic downturn

By Caroline Salls

Pittsburgh, Dec. 19 - The Money Tree Inc. filed Chapter 11 bankruptcy on Friday in the U.S. Bankruptcy Court for the Middle District of Alabama.

The Money Tree said it has been impacted greatly by the financial collapse and continued related economic downturn.

The company said the inability of many of its customers to pay their obligations when due, the losses created by these troubled loans, increased governmental regulations and increased investor redemptions have placed increased pressure on the Money Tree's liquidity and financial position.

The Money Tree said it hired Warren, Averett of Kimbrough & Marino, LLC to guide the restructuring.

In addition, the company began implementing a series of cost-cutting measures, including the merging of marginally-profitable branches to 46 branches from 92. The Money Tree plans to continue this process as part of its reorganization.

"This filing allows the Money Tree to enhance its short-term liquidity while we confront this historically difficult environment for our business," president Bradley D. Bellville said in the release.

"We will continue to focus on our core business and restructuring the Money Tree to fully realize our long-term strategy."

According to court documents, the Money Tree has $68 million of total assets and $71.31 million of total debt.

The company's largest unsecured creditor is John N. McLendon of Leesburg, Ga., with a $1.21 million unsecured note claim. The Money Tree did not list any other unsecured creditors with claims of $1 million or more.

Subsidiary Best Buy Autos of Bainbridge Inc. is not a party to the bankruptcy filing, the company said.

According to an 8-K filed with the Securities and Exchange Commission, the bankruptcy filing may constitute an event of default and trigger repayment obligations for Best Buy Autos of Bainbridge under the terms of two separate automobile floor-financing arrangements and related guaranties in favor of Dealer Services Corp. and GrandSouth Bank.

Since Best Buy is not part of the bankruptcy case, the Money Tree said it plans for Best Buy to make payments under the financing in question as they come due.

The company is represented by Baker Donelson Bearman Caldwell & Berkow.

The Money Tree is a Bainbridge, Ga., consumer loan company. The Chapter 11 case number is 11-12254.

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