PrimaLend Creditors Block Payments to CEO-Controlled Firm (1)

Creditors of bankrupt auto-dealership lender PrimaLend Capital Partners won a temporary halt of monthly loan payments to a firm controlled by the company’s Chief Executive Officer Mark Jensen.

Before the payments can resume, US Bankruptcy Judge Mark Mullin said he must decide if the Jensen-affiliated firm actually owns a stake in some PrimaLend loans. The Jensen firm, BVY Partners II, argues that since it paid $34 million for participation rights in the loans, whenever PrimaLend collects loan payments from its borrowers, part of the cash must go to BVY.

An official creditor committee in the insolvency case is challenging BVY’s ...