Will There Be More Assets to Recover for LandAmerica Creditors?


Just last Wednesday, October 27, 2010, the LandAmerica 1031 Exchange Company Liquidating Trustee (the “Trustee”) and CitiGroup Global Markets, Inc. (“CGMI”) reached an agreement for the purchase of all auction rate securities which CGMI sold to LandAmerica 1031 Exchange Services, Inc. (“LES”) for the amount of $95.5 million.

This is a full resolution of all claims and potential claims between the parties, subject to approval by the Bankruptcy Court. A hearing to approve the settlement will be held November 9, 2010 at 11:00 a.m. at the U. S. Bankruptcy Court for the Eastern District of Virginia here in Richmond.

This agreement comes at the end of an agonizing wait for hundreds of investors who had given over their 1031 transactions funds to LES as a qualified intermediary under the IRS regulations for these investment exchanges. LES’ investment of investor’s funds in auction rate securities went sour when credit markets seized up and the securities’ value plummeted to essentially zero. The situation was so serious it tipped not only LES over into bankruptcy, but was the straw that broke the back of LandAmerica Financial Group, one of Richmond’s Fortune 100 firms.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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