Articles Posted in IMH Secured Loan Fund

IMH Financial Corporation Files Amended Preliminary Prospectus with the SEC in Anticipation of Pursuing an IPO

Today, IMH filed an amended preliminary prospectus with the Securities Exchange Commission (SEC). Click here to view IMH’s Form S-11/A. The prices and terms for the IPO have yet to be determined. Interested investors are urged to carefully read all 27 pages of the “Risk Factors” discussed in the company’s prospectus.

news.jpgToday, the Wall Street Journal published an article summarizing the state of affairs for IMH Financial Corporation, formerly doing business as the IMH Secured Loan Fund (the acronym I-M-H stands for “Investors Mortgage Holdings”).

Click here to view the WSJ article. [Subscription required to read the entire article]

For those of you who do not have a subscription to the Journal, here are a few highlights mentioned in the article:

cards.jpgNow that the conversion of IMH Secured Loan Fund units into shares of IMH Financial Corporation is complete, brokerage firms have begun quietly disseminating the bad news to their customers. When they open their monthly statements, many IMH investors will be surprised to learn that their investment has fallen in value by more than 66%. As of December 28, 2010, the estimated price given to shares of IMH Financial Corporation common stock was $15.0500 per share. However, even though the shares have been given an estimated value, IMH’s stock is still illiquid and cannot be publicly sold. As previously reported in this blog, the IPO has been placed on indefinite hold.

Click here for more blog postings about the IMH Secured Loan Fund and IMH Financial Corporation.

Thumbnail image for whoa.jpgShareholders in the IMH Financial Corporation (formerly known as the IMH Secured Loan Fund) hoping to cash in on the promised initial public offering (IPO) should take note of the following information that was recently included in the Form 10-Q filed by IMH Financial Corporation on November 22, 2010:

We received notice on June 8, 2010 that we were the subject of an SEC investigation. After consultation with our potential underwriters, legal counsel and others, we believe that it is not probable at this time that we will be in a position to complete an IPO until matters concerning the SEC’s investigation are clarified or resolved and market conditions are more favorable. We cannot determine at this time when matters before the SEC will be clarified or resolved.

On October 27, 2010, IMH Financial Corporation filed an initial registration statement with the Securities & Exchange Commission (SEC) seeking approval from the SEC to pursue an initial public offering (IPO). In a letter to shareholder’s IMH conservatively reported:

The registration statement is not yet effective, is subject to customary review by the SEC, and we expect to file various amendments to the registration statement in the course of the SEC review process. The size, timing and ability to complete the proposed offering are subject to and contingent upon marketing considerations, including financial market conditions, the timing of effectiveness of the registration statement and other risks, uncertainties and considerations.

Additional Information:

The Alcala Law Firm, a securities law firm based in the San Francisco Bay Area, has just published a newsletter for IMH Secured Loan Fund investors who had their investment converted into shares of IMH Financial Corporation. The newly issued IMH shares are not publicly traded and are illiquid. Investors have several options available to recover some or all of their investment losses, including a class action lawsuit against IMH and individual securities arbitration claims against stockbrokers who sold or recommended IMH.

For more information, please click on the link below to download the IMH Newsletter:

IMH NEWSLETTER

On June 7, 2010, an IMH Secured Loan Fund Unitholder, filed a proposed class action lawsuit captioned, Charlotte Wood, on behalf of herself and all others similarly situated v. IMH Secured Loan Fund, LLC, IMH Financial Corporation, Investors Mortgage Holdings, Inc., IMH Holdings, LLC, IMH Management Services, LLC, Shane Albers, William Meris and Steven Darak (the “IMH Defendants”), before the United States District Court for the District of Arizona (the “Wood Action”), as well as an application to enjoin the vote from proceeding. In summary, the Wood Complaint alleges that the Conversion Transaction was: (1) being effectuated pursuant to a false and misleading Consent Solicitation and other false statements by the IMH Defendants, and (2) that the Conversion Transaction was both procedurally and substantively unfair to IMH Unitholders. Therefore, the complaint alleges, the Conversion Transaction is a breach of both the IMH Defendants common law fiduciary obligations to the Unitholders and their duties under the Fund’s Operating Agreement.

On June 9, 2010, the IMH Defendants announced that they had obtained a sufficient number of votes to move forward with the Conversion Transaction, although the vote had not been certified, thereby mooting Wood’s injunction motion. According to the preliminary results reported by IMH, 64.67% of the total membership interests submitted a vote with 57.48% of the net votes being cast in favor of the Conversion Transaction. On June 10, 2010, the IMH Defendants further announced that they were voluntarily dismissing the action entitled, IMH Secured Loan Fund, LLC v. David I. Kurtz, an individual, on behalf of himself, and all other persons similarly situated, Case No. 2:10-01071-ROS (the “Kurtz Action”), which they had filed before the Arizona court, alleging that certain Unitholders were trying to interfere with the vote.

On June 14, 2010, the “Committee to Protect IMH Secured Fund,” filed an action and injunction motion similar to the Wood Action, before Vice Chancellor Leo Strine in the Chancery Court for the State of Delaware. Thereafter, the Vice Chancellor Strine held a short telephonic hearing indicating that he was denying any application for injunctive relief, but that the any harm to the Unitholders as a consequence of the Conversion Transaction and the attendant vote, could be compensated for by monetary damages. Wood has re-filed her action before Vice Chancellor Strine, and intends to continue her action for damages on behalf of the Unitholders.

My securities law firm represents several IMH investors, some of them unaccredited investors who never should have been allowed to purchase the fund in the first place. A large percentage of these investors purchased the IMH Secured Loan Fund from brokers registered with Independent Financial Group. My clients want their money back as soon as possible. The quickest way to accomplish this was to cash out at the price of $1,000 per unit as part of the tender offer from MacKenzie Patterson Fuller (MPF) which expired on April 26, 2010. Admittedly, the $1,000 per unit price is a steep discount from the $4,406.86 per unit book value reported by IMH in the Form 10-K recently filed with the SEC for the period ending December 31, 2009. However, investors currently have no way to sell or redeem their units at this or any other price. The next opportunity for investors to sell their units may be as part of an initial public offering (IPO)–assuming the company’s restructuring plan is approved by investors and the company can pull off a successful IPO under what may prove to be very challenging market conditions. IMH management anticipates that the initial IPO price will be set at a discount to the book value per share price.

There is at least one group lead by LGM Capital Partners LLC that is opposing IMH’s plan and advising members to vote against the reorganization. On May 18, 2010, “The Committee to Protect IMH Secured Loan Fund” filed a statement with the SEC advising members to reject management’s restructuring plan. Additional information was filed by the committee on May 20, 2010. Click here to download the committee’s “talking points” which was intended for use by broker dealers when advising customers about IMH management’s proposal.

Investors have until 5. p.m. on June 14, 2010, to cast their vote on management’s proposal to restructure the company. If management’s plan is approved, investors will be allowed to exchange one ownership unit for 220.3419 shares of Class B or Class C common stock. When investors cast their vote, they must elect whether to receive Class B stock, Class C stock, or some combination of the two. Those who do not make an election will automatically receive Class B common stock in exchange for their membership units.

Today, management for the IMH Secured Loan Fund filed with the Securities and Exchange Comission (SEC) a statement [Form SC 14D9] recommending that investors reject the tender offer from MacKenzie Patterson Fuller (MPF) to purchase their units at a price of $1,000 per unit. MPF’s offer expires April 26, 2010. MPF is offering investors the opportunity to obtain an immediate cash out of their investment in the fund. IMH’s fund manager characterized the tender offer as “an opportunistic attempt to deprive the Members of the Fund who tender Units in the Offer of the potential opportunity to realize a greater long-term value of their investment in the Fund.” IMH’s fund manager, however, could not provide any guarantees or assurances to investors about the fund’s long-term prospects. Before deciding whether to accept or reject the tender offer, investors are strongly urged to read “Item 8 (Additional Information)” contained in the recent SEC filing by the fund’s manager.

Investors in desperate need of cash who accept MPF’s tender offer may be able to recover some or all of their losses through securities arbitration. The Alcala Law Firm currently represents several investors, many of them elderly or retired, who are pursuing arbitration claims against their financial advisors for inappropriately recommending the IMH fund to them.

This is the third update from the ongoing investigation on behalf of individuals who invested in the IMH Secured Loan Fund private placement. On March 16, 2010, a tender offer statement was filed by real estate management company MacKenzie Patterson Fuller (MPF). According to MPF’s website, the firm specializes in “turning discounted illiquid real estate securities into attractive marketable assets.” Under the terms of the proposed tender offer, MPF is offering to pay $4,000,000 to acquire 4,000 units which equates to $1,000 per unit.