THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Tuesday, May 23, 1995 TAG: 9505230249
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: BY MARC DAVIS, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 55 lines
A bankruptcy judge ruled Monday that investors can foreclose on the Virginia Beach headquarters of Computer Dynamics Inc., even though the company faces possible reorganization under Chapter 11.
The investors will sell the three-story building near Pembroke Mall at a foreclosure sale Thursday.
Judge David H. Adams said he will allow the sale even though some creditors objected. Adams said he is ``very concerned about the physical status of the building,'' which is nearly empty now that Computer Dynamics is virtually out of business.
Anyway, the judge said, Computer Dynamics has no equity in the building because the company owes more than the building is worth. ``It is substantially under water, if you will,'' Adams said.
The hearing was necessary because Computer Dynamics faces an involuntary Chapter 11 petition in Bankruptcy Court, filed this month by four creditors. That action automatically freezes the company's assets. The company has not decided whether to fight the petition.
Several more creditors may soon join the Chapter 11 effort, said attorney Vincent Olivieri, who represents the original creditors. He declined to name the new creditors.
Earlier this month, Computer Dynamics' majority owner and chief executive officer, Robert L. Starer, announced that the company is all but dead. The company, which once had 600 workers, has given up all its contracts and fired all its employees, Starer said.
Parts of the company remain in business under new ownership. The career school that bears the company's CDI logo, and a computer school that operates in nine cities nationwide, still operate. Starer bought both subsidiaries from Computer Dynamics in December and April, respectively.
The foreclosure against Computer Dynamics' building was begun last month by two Delaware corporations named Agency Investments I and II. They hold $3 million in development bonds that are secured by a deed of trust on the building. Two weeks ago, the bondholders asked the bankruptcy judge for permission to continue with the foreclosure, despite the pending Chapter 11 action.
In court Monday, an appraiser said the building is worth $2.1 million and needs $50,000 in immediate repairs. Computer Dynamics also has state and federal tax liens against it totaling $1.4 million.
A property manager also testified that the building is about to lose its electricity, the fire sprinkler system may not work, and the elevator has not been serviced.
The bondholders' attorney, Peter G. Zemanian, argued that the building must be sold immediately to maintain its value. Computer Dynamics did not object. by CNB