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Michael Lares' Bankruptcies

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Michael has gone bankrupt two times.

Publicly available US Court records show;

  • Michael's first bankruptcy was filed under Chapter 13 on February 19, 1993
  • Michael's second bankruptcy was filed under Chapter 7 on December 5, 2011 (after leaving the US and moving to Canada).

This footnote [1] provides links to the source for the bankruptcy records and to references explaining the distinctions between Chapters 7 and Chapter 13 bankruptcies.

» Documentation of Michael's Bankruptcies:

1) Michael's First Bankruptcy (Chapter 13):

Michael's Bankruptcy Petition number 93-70953-wb was filed in the United States Bankruptcy Court, District of South Carolina (Charleston) on February 19, 1993, and terminated on March 26, 1994. The bulk of documentation on this matter remains in paper form at the Court. Here are all the available court records of Michael's first bankruptcy case (10 pages).

These document show two of the creditors were the Wachovia Mortgage Company and the First Union National Bank. Both are now Wells Fargo.

2) Michael's Second Bankruptcy (Chapter 7):

Michael's Bankruptcy Petition number 11-20237 was filed in the United States Bankruptcy Court, District of North Carolina (Bryson City) on December 5, 2011 and terminated on March 14, 2013. Here are some of the case's significant documents which will be discussed a bit more below:

» Total Asserts and Liabilities

Michael declared his total assets to be US$1,918,720 and his total liabilities to be US$1,720,802.

» Real Property

In "Schedule A -"Real Property" Michael listed 4 properties. This included valuing a BC property (DL384) to be US$78,600. This is the only property identified in "Schedule C Property Claimed as Exempt" (exempt from being seized by creditors).

Michael identified 3 other Real Properties and stated his intent to surrender these properties to his creditors:

  • 3 BR home located at 260 Lares Mountain Road on approx. 100.68 acres, declaring his interest to be US$475,000
  • 77.74 acres located at Lares Mountain Road, NC - adjacent to 100 acres. declaring his interest to be US$913,450
  • 86.05 acres located at Deer Run, Boiling Springs, Murphy, NC, declaring his interest to be US$370,020

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» Personal Property (Vehicles)

In "Schedule B - Personal Property" Michael listed 2 vehicles:

  • 2002 Hummer H1 Enclosed Wagon 4 Door 4 Passenger w 22,000 miles, declaring his interest to be US$60,000
  • 2005 Hummer H2 Utility SUT Luxury 4WD w approx. 90,000 miles, declaring his interest to be US$21,350 (this is probably the one on the Ranch today)
  • In "Schedule C Property Claimed as Exempt" Michael claimed the 2002 Hummer H1 to be exempt and stated his intent to retain both Hummer vehicles.
  • There are no less than 43 creditors noted in the List of Creditors including no less than 12 banks, 4 credit cards, adjusters, and wireless providers, as well as individuals including Ben Lares, Brian Lares II, and Nicole Lares.
  • The Amended Statement of Financial Affairs offers some additional clarity and granularity to some of Michael's declarations found in the Initial Petition.
  • The Final Decree confirms the case against debtor Michael Dennis Lares, together with the other trade names he used, to be closed.
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» Community Bank & Trust Foreclosure Motion and Order:

One of Michael's main creditors, Community Bank & Trust, put forward a "Motion to Modify Stay" on to allow it to foreclose on both the 77.74 acre and the 86.05 acre properties. The motion is dated March 2, 2012 and documented the following facts:

  • Deeds of Trust on these properties were granted to the Community Bank & Trust by both Michael Lares and Nicole Lares on August 14, 2009 in order for the Lares' to borrow almost US$1million (US$942,091.99),
  • On August 27, 2010 Michael executed promissory notes for these properties in the combined amount of US$942,041.98 stating in each promissory note the purpose to be "Renewal of debt on investment property, (several months later Michael left the US and moved to Canada),
  • On December 5, 2011, at which time he had been living in Canada for roughly 1 year, Michael filed his petition for bankruptcy under Chapter 7,
  • By January 4, 2012, taking into account all funds the bank had received, together with applicable interest and late charges, Michael remained indebted to Community Bank & Trust for US$996,366.96.
  • Community Bank & Trust noted in his bankruptcy petition Michael listed the combined fair market value of these properties to be US$1,283,470 and further stated its belief that the combined value of the properties is less than the payoff owed by Michael, and therefore Michael's debt was undersecured.

On April 3, 2012 the court ordered that Community Bank & Trust be allowed to foreclose its secured interest and/or lien in the property.

In other words, Michael did not pay his debt to Community Bank & Trust, who then foreclosed on the properties, likely taking a loss given its belief that Michael's debt was undersecured.

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» Huntington National Bank Hummer Repossession Motion and Order:

Another of Michael's creditors, Huntington National Bank, put forward a "Motion for Relief From Stay" to allow it to repossess a 2002 Hummer H1 Enclosed Wagon 4DR vehicle. The motion is dated January 31, 2012 and documented the following facts:

  • On September 25, 2010 Michael signed a loan agreement in the amount of US$59.185.38 to finance his purchase of the above mentioned 2002 Hummer H1.
  • Michael stopped making payments on this loan after June 23, 2011.
  • The outstanding balance Michael owed to the bank was US$58,689.94.
  • Huntington filed the motion noting it had not been receiving any payments on the account for the vehicle, there is no equity in the vehicle and the vehicle is depreciating in value, and Huntington's interest in the vehicle is not adequately protected (i.e. undersecured).

On February 23, 2012 the court ordered that "Huntington shall be allowed to recover and sell the vehicle pursuant contract and the Uniform Commercial Code."

In other words, as with the Community Bank & Trust, Michael did not pay his debt to Huntington National Bank who then repossessed the Hummer H1, likely taking a loss because Huntington's interest in the vehicle was not adequately protected.

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» Declaration of Other Trade Names

In an Initial Petition the debtor must reveal other trade names used, which Michael listed as:

  • Lares Underseas Contracting Inc,
  • Blue Moon Herbs LLC,
  • Cypher Group LLC,
  • Lares Acquisitions LLC,
  • ROCKX Securities LLC, and
  • SomniResonance.

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[1] All of Michael's bankruptcy documents are available to the public at modest fees via the US Public Access to Court Electronic Records (PACER) website. Search the name "Michael Dennis Lares" and/or the bankruptcy petition numbers noted above.

The differences between Chapter 7 and Chapter 13 bankruptcy are explained by the US Bankruptcy Court (Norther District of California) and North Carolina Bankruptcy Law publications.

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