The Internet will be the sight of a fight by creditors to advise
debtors that ``Bankruptcy Is A Ten Year Mistake.'' Banners will
begin on the World Wide Web on Sept. 10 when viewers search the
word ``bankruptcy,'' and the bold ads will suggest that the viewer
go to a site where the ``mistake'' is explained. The idea is
fostered by Donald B. Kramer, a St. Louis collection attorney, who
represents banks and credit unions, which are suffering from the one
million individual bankruptcies being filed in 1996. Debtor
attorneys have urged Kramer to just say ``Bankruptcy MIGHT Be A Ten
Year Mistake,'' but the collection lawyer will not retreat,
indicating that he truly believes the word ``IS'' belongs in the
statement.
Initially, the banners are scheduled on the Lycos and InfoSeek
Internet search engines, with added banners depending on creditor
support. Kramer estimates the project will cost $30,000 for a year
of Internet activity, which is expected to reach more than 120,000
viewers searching the ``bankruptcy'' word. ``That's not much,''
says Kramer, ``when you consider the millions being spent by
debtors' counsel in advertising to get financially distressed people
into the bankruptcy courts.'' Creditors are urged to view the
project at www.attorneyfind.com/bankruptcy.html and contribute if
they like the idea.
CONTACT: Don Kramer, of Donald B. Kramer
800/288-5437, ext. 102.
LAGRANGE, Ga. -- Sept. 6, 1996 -- FLAG Financial
Corporation (OTC:FLAG) announced today that its wholly-owned
subsidiary, First Federal Savings Bank of LaGrange, expects to take
a $2.3 million charge against earnings in the third quarter related
to a portfolio of equipment leases sold to the Bank through the
Bennett Funding Group, Inc. and loans serviced by a Bennett
affiliate.
The charge will result in the Bank reporting a net loss in the
third quarter.
As was disclosed by FLAG in an earlier press release, the
Bennett Funding Group, Inc. is an equipment leasing and finance
company based in Syracuse, N.Y. which recently filed for Chapter 11
bankruptcy protection. As a result of the Chapter 11 filing, the
collection of cash flows and the values associated with these leases
have become less certain, and to reflect this possible loss in
value, the Bank recognized a special provision of $678,000 in the
second quarter.
After further review and consultation with regulatory
authorities and advisors to the Bank, it was determined that an
additional special provision of $2.3 million should be added to the
reserves of $678,000. Including the additional provision of $2.3
million, approximately $3.0 million in reserves will have been
established by the Bank in connection with the bankruptcy. As part
of this review, it was also determined that future collections with
regard to these equipment leases totaling $4.5 million should be
classified as "Doubtful", and that the loans serviced by the Bennett
affiliate totaling $5.0 million should be classified as
"Substandard."
Although the establishment of this level of reserves indicates
less than full book value will be realized from these leases and
loans, it in no way limits the amount of recovery sought by the
Bank. In fact, the Bank is seeking full recovery of the amounts
invested and will aggressively pursue legal and other actions to
seek such recovery.
Commenting on the Bennett Funding situation, John S. Holle,
President of FLAG Financial Corporation, stated, "Although we are
disappointed in the recent bankruptcy filing of Bennett Funding,
there are three things to remember as it relates to this charge:
CONTACT: FLAG Financial Corporation
Ellison C. Rudd, 706/845-5000