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Kern looks for bankruptcy accord Trust fund repayment amount remains a key unresolved issue By DAVID PRESZLER Kern Family Services officials hope bankruptcy proceedings and questions about how much the death-services company must repay to a trust fund will be settled by the end of the year -- though court officials say that's unlikely. The company, which runs the Perl group of funeral and burial services in Medford and similar businesses in Grants Pass, filed its Chapter 11 reorganization plan in U.S. Bankruptcy Court last week. "We are hoping that everything is approved and resolved before Dec. 31," said Dan Isard, a president of Foresight Analysts of Phoenix, Ariz., a management firm hired to run Kern Family Services. But court officials say approval of Chapter 11 plans usually takes several months. Creditors normally must be notified 35 days before a hearing date and no date had been set as of Friday, the case administrator said. Earlier this year, state officials revealed that an estimated $5.3 million was missing from a trust fund fueled by prepaid funeral and burial plans under Kern's control. Isard challenges that figure, saying it doesn't take into account payment for services already rendered that has yet to be collected from customers. He does acknowledge that a substantial amount of money needs to be repaid. A Portland company, American Funeral and Cemetery Trust Services, will determine how much Kern Family Services owes the trust fund, an arrangement to which Kern and state officials have agreed. Kern officials expected to receive American Funeral's initial report late last week but hadn't as of Friday, Isard said. Isard said the company will spend a few days reviewing the report to make sure it includes all the customers who purchased prepaid plans. "The first person to be served is the consumer," he said. "The consumers have continued to be served even during this period of reorganization." Wilson Muhlheim, Kern's bankruptcy attorney, said the 3,400 people who have purchased services through the trust fund will be sent an update in the next few weeks. Kern has agreed to sell all of its Southern Oregon businesses and repay the trust fund from the proceeds. Agreements with two companies to buy the Medford and Grants Pass businesses have been reached but can't be finalized until the court approves Kern's Chapter 11 plan, Isard said. Stewart Enterprise, which is based in Louisiana, is set to buy the Medford companies: Perl Funeral Services, Perl with Siskiyou Funeral Home and Siskiyou Memorial Park. Service Corporation International (SCI), the former owner of the Perl group, is set to purchase Kern's Grants Pass companies: Hull & Hull Funeral Home, Hawthorne Memorial Gardens and Southern Oregon Cremation Services. SCI was forced to sell the Perl group in 1996 by the Federal Trade Commission, which feared the large company had a monopoly in Medford. SCI sold the Perl group to Kern, which has claimed that the trust fund woes began at the time of that sale. Questions about where the missing money went and whether David Kern, who headed Kern Family Services before Isard's firm took over, misappropriated it remain unresolved. The Oregon attorney general's office is looking into the matter but isn't likely to conclude its investigation until after the business matters are settled, spokesman Peter Cogswell said. Mail Tribune Copyright � The Mail Tribune 1998, Medford, Oregon USA