Estate opposes Pratt bankruptcy plan

The estate of Joe Fought will ask the United State Bankruptcy Court to lift a stay of foreclosure against Sisters accountant Arthur C.F. Pratt in a hearing scheduled for September 19 in Portland.

Pratt owes the estate $2,258,903.61 according to documents filed on July 26, 1996 by estate attorney Charles L. Kobin.

In 1993 and 1994, Fought loaned approximately $1.6 million to Pratt to build a large office building at the corner of Hood and Pine streets in Sisters. Fought loaned the accountant another $600,000 so Pratt could purchase a large historic home in Bend.

Fought died in October, 1995, at age 87.

Pratt's monthly payments on the loans from Fought totaled $23,484.82 per month. Pratt was unable to successfully lease the office building and failed to make the required payments or pay property taxes. The estate filed a civil suit against Pratt last March to foreclose on the property.

In June, Pratt filed for voluntary bankruptcy to forestall the foreclosure and "reorganize" his debts.

That reorganization is designed to allow Pratt to retain ownership of the properties. Although it cost about $1.6 million to build, the 13,000 sq. foot building was recently appraised at $690,000 by an appraiser working for Pratt.

Pratt claims the reduction in value was caused by a collapse in the local market for commercial office space.

Essentially, Pratt's attorneys want to force the estate to take the $1 million loss on the Sisters office building while continuing to finance it at the appraised value over 30 years at an interest rate of 10¹/4 percent.

The estate opposes a "cram down" of this plan over their objections. The estate says the building is worth far more than the figure at which it was appraised and that creditors have some rights to a substantial increase in value as the market for office space improves.

The estate also claims that Pratt would not be able meet his still substantial payments even if they agreed to accept the loss.