The radio pitchman known in Atlanta for urging audiences to get a no-closing-costs mortgage — “the biggest no-brainer in the history of Earth” — has filed for bankruptcy protection.
Jon Shibley, whose Lenox Financial Mortgage was on pace to write $4 billion in mortgages in 2007, filed for Chapter 13 protection in the U.S. Bankruptcy Court’s Northern District of Georgia on Aug. 20. He lists two creditors.
“Every major corporation goes through some sort of reorganization,” Shibley said. “A 2007-sized mortgage engine doesn’t really work in a 2011 mortgage market.”
The filing was made to reorganize debts, Shibley said. One of the two creditors is the attorney for Daniel Smith, a former Lenox Financial part-owner who sued Shibley and his company after Smith was terminated from the firm.
The attorney, Ed Dovin, said Shibley filed for bankruptcy the day before Dovin was due to ask a judge for a ruling against Shibley. Shibley had failed to make a $300,000 payment to Smith in November as part of a settlement agreement related to the lawsuit, Dovin said.
“I have every reason to believe he filed because he didn’t want the judgment,” Dovin said.
Bankruptcy attorney Scott Riddle, who is not involved in the case, said such bankruptcy petitions are usually made in a rush. He called the Chapter 13 filing unusual, saying it may have been chosen because it is usually easier to dismiss.
“He probably had to stop something very quickly,” Riddle said.
Shibley would only say that some business situations were trying to “leak into my personal world, as well.” He has a personal interest in protecting his companies, he said. Shibley runs The Griddd, a technology and work flow management company for the mortgage industry, which purchased the assets of Lenox Financial. The Griddd has about 20 employees, he said.
“There are a lot of things going on legally that are connected,” Shibley said. “There’s a lot of strategy involved in using the law to its full capabilities to protect my business. This isn’t my first rodeo.”
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