20th May 2015
DANGER, WILL ROBINSON, DANGER!
Foreclosure mill Butler & Hosch closes its doors.
Butler & Hosch, the Orlando-based foreclosure mill, shut its doors on May 14, 2015, after Bob Hosch, the firm’s CEO informed employees that the firm’s strategic plan of buying up its competitors had caused the firm to grow to quickly and left it without the cash to pay its employees. Hosch said the firm, founded in Florida in 1972, operated in 27 states and the District of Columbia, employed 700 attorneys, paralegals and back-office staffers, and was handling up to 60,000 foreclosure files for clients.
The firm stated that it filed an assignment for the benefit of creditors and stopped operating last week. The filing is similar to, but not the same as, a bankruptcy filing. Hosch said he handed over control of the law firm to third-party fiduciary, Michael Moecker & Associates of Hollywood, which specializes in insolvent companies and has an auction arm. Attempts to increase the firm’s lines of credit or sell off pieces of the firm ahead of the closure were unsuccessful.
The firm left its employees with this cheery note: “While Mr. Moecker has complete access to our assets, he will not have sufficient cash on hand to fund payroll at the end of this week…I am sorry. Thank you again for your past support and loyalty to BH during its nearly 35 year legacy.”
So, 700 people are left without paychecks and an uncertain future because of the failure of management to properly plan for the future. I’m sure, however, those senior partners will be fine, having banked the cash they’ve made during Florida’s foreclosure crisis.
Hmm. Seems like I’ve heard this story before…
In 2011, the Law Offices of David Stern closed up shop, leaving its employees and the courts hanging in the wind. Stern sent a letter to all of the chief judges in Florida stating that it was essentially abandoning all 200,000 foreclosure cases that it had been handling at the time.
The result was chaos. Stern’s lawyers didn’t appear in court for hearings and status conferences, leading the courts to dismiss Stern’s cases en masse. Foreclosure sales that had been scheduled were cancelled. Other Stern cases sat untouched in the courts for months and years. With no money to pay staff, Stern had no one to transition those files to his clients’ new attorneys. The clients and their new attorneys had no access to the case files and had to attempt to reconstruct those files from scratch in some cases.
And, of course, the impact of Stern’s collapse was heaviest on community associations. Because Florida law only makes the bank responsible to pay assessments when it obtains title, the delays in foreclosure cases mean that community associations go for months and years where neither the title owner nor the bank pay the ongoing assessments. When Stern dumped its cases on the Florida court system with no one to mind them, community associations that had been expecting the banks to eventually foreclosure and take title were hit with additional delays that increased the burdens on its members to pay additional assessments to make up for those payments not received in the ongoing foreclosure cases.
While one hopes that Butler & Hosch’s shutdown will be handled in a more responsible manner, the fact that attorneys have missed court hearings already doesn’t inspire confidence.