Preferred Capital, Brecksville, Ohio

Leasing News has received several “insider” reports that the company may be closing its doors, primarily due to the debt with NorVergence and many lawsuits involved. We have been trying to get an “official” confirmation or denial since last week.

We have several telephone calls to the company, who appear to have an operator, who states she is referring our telephone calls to appropriate persons, but to do date, no confirmation or denial of their continued operation. Other inquiries are not being directly answered. According to a highly reliable source, the company is actively working with creditors to avoid filing bankruptcy. They are “...still in business, this week,” we were told.

Others tell us they are in the process of closing, as it appears they cannot work out the cash flow with their banks and other creditors.

To answer some questions from readers, this company is not connected in any way with CapitalWerks of Southern California. who purchased a company with a similar name. Or with the company out of Ardmore, PA, with the same name. Or the mortgage company out of Waterbury, Connecticut. Or Huntington Preferred Capital in Columbus, Ohio.

Or any other such companies. This company is a member of the Equipment Leasing Association, according to their web site, and their physical address is:

6860 W Snowville Rd,Ste 110
Brecksville, OH 44141

As to pending NorVergence suits and court cases, perhaps they will be handled by creditors, and there is no indication that a Chapter 11 Bankruptcy will be filed, but it is too early to tell at this time.

Relationships with Sky Bank or Huntington Bank were mentioned, but Leasing News could not get confirmation or denial on these issues. It appears several banks had purchased their contracts, more than just two. We are also told settlements with NorVergence lessees has been difficult as the leases were sold to several banks and the settlements are much less than what is owed on these various discounted lease contracts. The news is traveling fast, and brought such responses as this one on the Yahoo List serve of NorVergence lessees:

“I'm sure that each and every entity on this board feels nothing but empathy for the employees of Preferred Capital as the events of last summer continue to affect the livelihoods of those who do not deserve such penalty. However, if there was ever an example of due diligence failure, it obviously falls far beyond the "leases" and their "relatively unsophisticated" business savvy (which is a term I can live with, frankly) when a leasing company risks their business model on a high-yield bet. It is certainly nothing to celebrate about.

“What might be something to celebrate, is an opportunity for Preferred Capital to exhibit grace under pressure and perhaps be magnanimous enough to provide assistance to our group and the agencies that are, in fact, trying to get to the bottom of this mess for the sake and future protections of everyone involved. This includes the banks, leasing companies, and honest business practices that equally stand to be twisted around and used as a weapon for profit in the future.”

Our flash report sent out yesterday brought some other confirmations, such as:

“I spoke to one salesman who has been looking for awhile, and he is taking a job with ********.
He said they let everybody go, skeleton crew...
Some of them are trying to get funding to start a new company as soon as they can.”

(This from a very reliable source-Name With held )

“I received an e-mail from my contact at Preferred (I am a customer)
indicating that they had shut down operations.  I called this person
who said that the NorVergence situation was the reason.  Sounds like
they have just a skeleton crew working and they're scrambling to work
things out with creditors.

”I have contacted them to see if they're willing to negotiate a fair
settlement on my Norvergence lease.  I did this two months ago and
their response was not acceptable to me.  I'll see what they're willing
to do now.

”This is all I know right now.”
(name with held )

This is one of the e-mails we received, and since it was sent to the client list, and we have the list as it was sent in a broadcast e-mail ( we are not including ), but are we consider this now public knowledge as it is being sent like a “chain letter” over the internet:

“Wanted to let you know that Preferred Capital, Inc. has closed.

”I have accepted a new position with a company by the name of Partners Equity Capital Corporation.

”I will be responsible for establishing a "focused" Home & Alternate Care Financing Division within PECC.

”You can continue to reach me at the following numbers:”

”Home Office: (866) 301-7043
Mobile: (330) 283-9483
Fax: (330) 220-9894
Email: Zenonzyga@aol.com

”My home office mailing address is:
1876 Meadow Drive
Hinckley, OH  44233
Partners Equity Capital is located at:
655 Business Center Drive
Horsham, PA  19044
Main Tel: (267) 960-4000

”Thank you for your past support and I look forward to working with you in the very near future.

”If you plan on attending Medtrade in Las Vegas, I look forward to speaking with you there.

”Thanks again for your past support.”

Zenon Zyga

Also we have received e-mails, such as:

“I'm responding to your request for comments about Preferred
Capital, which is located in Cleveland (actually a suburb) where my
company is also.  A couple of months ago I had a sales rep from
Preferred Capital who works out of their home office come to me to see if we could help fund some of his deals because he was told that Preferred Capital was at that time under a 30 day funding
moratorium.  In addition, he said that one or some (I don't remember
which) of his company's checks to his vendor(s) recently bounced.  He
worked with me for about 30 days, and then stopped communicating with me
- so I don't know what the conclusion, if any, at his company is. 
However, during that time I also called Preferred Capital myself and
spoke with Tony Polito who shared a little more information with me.  He said that Preferred Capital had a number of leases in the Norvergence portfolio, and that was the cause of their problems.  I really don't know any more than this - whether this means that they were having trouble selling their portfolio to free up their funding lines, or whether that means that they were being forced to buy back leases that they'd already sold - I just don't know.  In any case, that's the info that I have.  I trust that you'll only use names if/when appropriate and treat this information professionally.”

--

“Preferred Capital has suffered dismissals of a number of cases in Summit County Ohio on grounds of misuse of the 'forum selection' clause. These adverse rulings can be appealed, and don't have to be observed by other judges in Ohio. These case dismissals in Ohio also mean Preferred could chose to sue Norvergence victims in their home states, or in New Jersey .

The Archive URL:
http://www.connincorp.com/Norvergence/ShowDir.asp

“scroll down to the bottom for the 'Preferred' Section”