National Gold Exchange Files for Bankruptcy By
David L. Ganz, Numismatic News
July 30, 2009
National
Gold Exchange of Tampa, Fla., a driving force in the rare
coin market for a generation, filed for voluntary protection
from its creditors under Chapter 11 of the Federal Bankruptcy
Code on July 24, giving breathing room to the brothers Mark
and Alan Yaffe and giving the firm a chance to reorganize.
There is about $35 million in secured debt and another $15
million in unsecured debt, according to filings with the U.S.
Bankruptcy Court for the Middle District of Florida. The case
has been assigned to Judge Michael Williamson.
Sovereign Bank of Providence, R.I., is the largest creditor
with over $35 million listed on the debtor's schedules.
On Monday, July 27, James Thorner of the St. Petersburg Times
said in a copyrighted article that Judge Williamson allowed
Sovereign Bank to continue to seize collateral in the form
of valuable coins it held from NGE to help repay loans made
totalling over $35 million.
The Times also reported that NGE was acting on a tip that
NGE co-owner Mark Yaffee had used $12 million to $15 million
in coins pledged in collateral for the $35 million business
loan for impermissible purposes - to build a $25 million residential
mansion in Avila, Fla.
Sovereign called in the loan and attempted to confiscate
the coins, typical of the way that most secured transactions
work when the lender is insecure.
Unsecured creditors include A-Mark, American Coin, American
Express, Brian Fazio and Bruce Kutscher, Emporium Hamburg,,
Gene Sanders, Kirk Kelly, Liberty Coin Galleries, Republic
National Business, and several others.
Unsecured creditor sums range from amounts as low as about
$1,800 to $5.5 million.
Mark and Alan Yaffe are owner-directors of NGE. The company
Web site claims to be the world's largest gold coin and silver
wholesalers. The same Web site lists offices in Zurich, Brussels
and Paris in addition to Tampa headquarters.
Some of the unsecured creditors are European banks.
Bankruptcy laws offer a debtor a period of 180 days protection
during which time creditors can proceed slowly and deliberately,
but not in a suffocating manner, while the debtor puts forth
a plan of reorganization. Creditors may form a committee and
offer a competing vision of the future of the company.
NGE's saga began July 21 with the filing of a 17-page complaint
in Hillsborough County Court against National, a European
subsidiary and the Yaffe brothers. It claims that the firm
borrowed more than $4 million over the amount permitted by
its credit agreement.
The judge asked both sides to reconvene in court on Aug.
3. NGE would like access to its coins so that it can continue
to operate its business.
James Thorner of the St. Peterburg Times contributed to this
report.