Bankrupt, Martin List Is Returning to the Life of a Cancer Specialist

Martin List, bankrupt from his pursuit of riches in land development, is dusting off his medical books in a rented Huntington Beach apartment as he prepares to return to practice as a cancer specialist, a career he gave up five years ago.

List, 57, the one-time multimillionaire who bought Orange City Bank and renamed it after himself last year, has no income now and is looking for a fresh start in life, said his bankruptcy lawyer, Phra A. Blakely.

Gone are his exclusive homes in Corona del Mar and Colorado Springs. Gone, too, are the Rolls-Royces he drove in each city. And gone are the many finer things that life at the top of the heap can supply.

Value of Acreage Plummeted

The real estate empire he was building, the space research efforts he was fostering and his hope of funding a $1-billion humanitarian foundation have collapsed as the value of Colorado land, including about 7,700 acres he owned in the Colorado Springs area, plummeted.

“He’s not a happy person at this time,” said Blakely in explaining why List has shunned interviews since filing a U. S. Bankruptcy Court petition for protection from creditors two months ago.

Last week, List turned his reorganization petition into a request for liquidation, and two trustees were appointed to collect his assets, sell them and pay off creditors. Reorganization would have allowed him to come out of bankruptcy somewhat intact and with a plan to pay off creditors. In liquidation, he loses everything but $400, Blakely said.

List has debts of $140 million and assets of $97.97 million. His primary land development company, ML Properties Inc., which also is in bankruptcy, has $112.3 million in debts and $157.1 million in assets.

About 80% of the estate is in raw land, which may not sell for some years, yet requires the owner to continue paying off loans and taxes.

Opposition to Reorganization

The effort to reorganize debts was met by tremendous opposition from creditors, the lawyer said. To get a reorganization plan approved, he said, 51% of the creditors and creditors holding two-thirds of the debts had to agree.

“We discovered that creditors had such a diverse interest on what they wanted that it became apparent we would not be successful in proposing a plan of reorganization that would be acceptable to the requisite majority,” Blakely said.

By deciding to liquidate, List also was able to get trustees appointed. The trustees quell any claims of conflict by removing List from managing the estate. The move also allows List to get on with his life, Blakely said.

Shortly after filing his bankruptcy petition, List agreed to sell his 95% stake in List American Bank to two Texas investors, who are friends of his and who provide him with space in their Huntington Beach office. The deal--for nearly $4.8 million, or $10.61 a share--is the same price List paid for it, prompting some creditors to claim that the now prosperous bank was sold for less than its value.

Blakely denied that the bank was sold for less than its value, pointing out that prior owners were foreclosing on List’s stock, that the bankruptcy could have damaged public confidence in the bank and that the buyers were putting more money into the bank.

“He was hurt tremendously by the turn of events,” the lawyer said. “He’s going through a very trying time. He’s renting a very humble apartment, and he’s driving a 1979 Ford.”

A bold and daring risk-taker who saw his family killed by Nazis in the forests of Poland during World War II, List had abandoned a profitable career as a cancer specialist in 1982 to concentrate on the potentially more lucrative real estate market.