Document text
Kerns kick in more for repayment That will help protect customers, officials say By David Preszler More assets are being added to the pot created to repay the $4.5 million missing from a prepaid funeral services trust fund in the Kern Family Services bankruptcy. A year and a half after the reorganization plan was approved, attorneys for the parties propose to further ensure that customers who bought funeral and burial services in advance get what they paid for. A hearing on the changes is scheduled for Sept. 13 in Eugene. If approved by the bankruptcy judge, the changes will secure more assets from the Kern family fortune as well as nearly $1 million from Uniservice Inc., the company that sold the Perl group of death-services companies to the Kerns in 1996. The agreement between the state and the parties also lays out backup funding, in the case of a shortfall that Kern attorneys say could arise. "Values did not pan out as some of them had originally been anticipated," said Dan Isard of Foresight Analysts. The firm has been running Kern Family Services� Medford businesses and has been involved in the case since the 1998 bankruptcy filing. Thus far, customers have continued to receive the goods and services they�ve paid for. Isard said the proposed changes will add new guarantees that consumers are protected. State officials said they believe the changes will ensure that there�s enough money to repay the trust. Meanwhile, state investigators continue to probe into the disappearance of the missing trust funds. The attorney general�s office declined comment because criminal and civil investigations are ongoing. In the bankruptcy proceedings, blame for the misuse of funds has fallen largely on David Kern and his wife, Ingrid, who were running the Rogue Valley businesses. Kern Family Services owned the Perl group of funeral and burial businesses in Medford and similar businesses in Grants Pass: Hull & Hull Funeral Home, Hawthorne Memorial Gardens and Southern Oregon Cremation. To repay the missing money, the Kern family has pledged nearly all of its personal assets and will sell its Medford and Grants Pass businesses. Control of those businesses has been handed over to a court-appointed management company and a trustee, who are seeking buyers. A buyer, Michael Leavitt, is waiting in the wings to purchase the Medford businesses for $3.5 million. Though several companies have expressed interest in the Grants Pass businesses, a buyer has yet to be found. The proposed changes include a settlement deal that would limit how much of the Kern family fortune can be used to make up any shortfall. The family already has contributed the Medford house that David Kern lived in, a house in Apple Valley, Calif., a condominium on Maui, a California funeral chapel and two commercial lots. Under the new deal, the Kern family would also contribute $1.1 million from the sale of a second Hawaiian condo and half of the family�s stock stake in a California company called U.S. Medical Instruments. The family also would contribute a $1 million life insurance policy on family patriarch Charles Kern, if needed. But those contributions would be the last from Charles and Shirley Kern. They would be permitted to keep their home in Rancho Mirage, Calif. Also as part of the settlement, Uniservice would agree to pay $995,000. The company would make the payment because it didn�t turn over enough money in the trust fund when it sold the Medford businesses. If even more funds are needed, the proposed deal also includes commitments from SCI, Uniservice�s parent company, and U.S. Bank to make up a possible shortfall. That money would come after all other options have been exhausted. SCI and U.S. Bank�s potential contribution to the repayment fund is limited to no more than $5 million. U.S. Bank is involved because the trust fund was deposited with � and improperly withdrawn from � the bank, according to court documents. Obituaries | Sports | Business | Classifieds | Tempo | Prime Times | So Oregon Sites | Outdoor Journal | Subscribe | Contact | Movies | Advertise | Real Estate Showcase | Archive | Editorials | Letters to the editor | Religion | Wake-up Call | NIE | Cyber Chef | Job Network | So Oregon Weather | WSJ Northwest | Forums | AP Wire | AP Money | F.A.Q. | Awards Ottaway Newspapers, Inc. The Community Newspaper Subsidiary of Dow Jones & Co, Inc Copyright �The Mail Tribune 2000, Medford, Oregon USA