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Kern seeks to pull back disclosure Former owner SCI could buy ailing firm By DAVID PRESZLER Kern Family Services will ask to withdraw its bankruptcy disclosure statement, scheduled for a hearing in U.S. Bankruptcy Court in Eugene this morning. Wilson Muhlheim, Kern's attorney, said Tuesday that the former statement and Chapter 11 plan were filed to meet a Dec. 2 deadline. He said they didn't sufficiently lay out how much is missing from a prepaid funeral and burial services trust fund and how it should be repaid. The disclosure statement had been met with a host of objections from the state, the prepaid customers' lawyer and the Internal Revenue Service, and those objections were also to be heard this morning. But Muhlheim said the need for new plan has more to do with getting a good accounting of the problem than the objections. "Frankly, I haven't read the objections," he said. The bankruptcy case has drawn attention because more than 3,600 customers who prepaid for funeral and burial services are among the creditors. Kern runs the Perl group of Medford and other burial and funeral services in Grants Pass. Kern officials have confirmed that $4 to $5 million is missing from a trust fund those customers paid into. The company has vowed to honor those contracts and replenish the fund by selling its businesses in both Medford and Grants Pass. But Muhlheim said calculations that were just completed by his office Tuesday peg the amount of missing money Kern Family Services is responsible for at $3,750,000. Kern officials have long contended that Service Corporation International, the former owner of the Perl group, is responsible for some of the missing money. Muhlheim said that poor records kept by Uniservice, an SCI subsidiary, have complicated the process and make it hard to say exactly how much SCI owes the trust fund. The court is set to consider both the disclosure statement -- the first step in the bankruptcy plan -- and a request to approve sale of Kern Family Services' Grants Pass businesses this morning. If the disclosure statement is withdrawn, the court will likely reschedule the hearing until Kern's attorneys file a new one, something Muhlheim expects to do in 10 days or so. The court could still approve the Grants Pass sale. Service Corporation International, 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. Doug Schultz, the Eugene attorney representing the prepaid customers, objects not only to the disclosure statement but to the proposed sale as well. Schultz said his problem with the sale is that although Kern has agreed in other documents that the money generated would go to repay the trust fund, the actual sale agreement doesn't make that clear. "The notice of sale doesn't say that and the way the it is structured it doesn't look like it will," he said. He said there's also nothing in the deal to ensure that the existing preneed contracts will be honored by the new owners. Kern officials have vowed that all contracts will be honored until the trust fund issue is resolved and the none of the prepaid customers will lose any money. Today's Business Index Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA