<PAGE> 1
---------------------------
OMB APPROVAL
---------------------------
OMB Number: 3235-0145
Expires: October 31, 1997
Estimated average burden
hours per response...14.90
--------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____)*
SOUTHMARK CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK
- --------------------------------------------------------------------------------
(Title of Class of Securities)
844544809
------------------------------
(CUSIP Number)
DAVID J. ALLEN, Esquire, 28W100 St. Charles Rd., West Chicago, IL 60185
(708)231-2625
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications
JULY 17, 1996
-------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [X].
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
SCHEDULE 13D
- -------------------- ---------------------
CUSIP NO. 844544809 PAGE 2 OF 9 PAGES
--------- --- ---
- -------------------- ---------------------
- --------------------------------------------------------------------------------
1 | NAME OF REPORTING PERSON
| S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
|
|
| GRACE BROTHERS, LTD.
|
- --------------------------------------------------------------------------------
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
| (b) [ ]
|
|
|
- --------------------------------------------------------------------------------
3 | SEC USE ONLY
|
|
|
- --------------------------------------------------------------------------------
4 | SOURCE OF FUNDS*
|
| WC,00
|
- --------------------------------------------------------------------------------
5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
| PURSUANT TO ITEMS 2(d) or 2(e) [ ]
|
|
- --------------------------------------------------------------------------------
6 | CITIZENSHIP OR PLACE OF ORGANIZATION
|
| ILLINOIS LIMITED PARTNERSHIP
|
- --------------------------------------------------------------------------------
| 7 |SOLE VOTING POWER
| |
NUMBER OF | |6,773,998 SHARES
SHARES | |
BENEFICIALLY -------------------------------------------------------------------
OWNED BY | 8 |SHARED VOTING POWER
EACH | |
REPORTING | |
PERSON -------------------------------------------------------------------
WITH | 9 |SOLE DISPOSITIVE POWER
| |
| |6,773,998 SHARES
-------------------------------------------------------------------
|10 |SHARED DISPOSITIVE POWER
| |
| |
- --------------------------------------------------------------------------------
11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
|
| 6,773,998 SHARES
- --------------------------------------------------------------------------------
12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
| SHARES* [ ]
|
- --------------------------------------------------------------------------------
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
|
| 18.4%
- --------------------------------------------------------------------------------
14 | TYPE OF REPORTING PERSON *
|
| BD
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 3
SCHEDULE 13D
- -------------------- ---------------------
CUSIP NO. 844544882 PAGE 3 OF 9 PAGES
--------- --- ---
- -------------------- ---------------------
- --------------------------------------------------------------------------------
1 | NAME OF REPORTING PERSON
| S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
|
|
| GRACE BROTHERS, LTD.
|
- --------------------------------------------------------------------------------
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
| (b) [ ]
|
|
|
- --------------------------------------------------------------------------------
3 | SEC USE ONLY
|
|
|
- --------------------------------------------------------------------------------
4 | SOURCE OF FUNDS*
|
| WC,00
|
- --------------------------------------------------------------------------------
5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
| PURSUANT TO ITEMS 2(d) or 2(e) [ ]
|
|
- --------------------------------------------------------------------------------
6 | CITIZENSHIP OR PLACE OF ORGANIZATION
|
| ILLINOIS LIMITED PARTNERSHIP
|
- --------------------------------------------------------------------------------
| 7 |SOLE VOTING POWER
| |
NUMBER OF | |607,961 SHARES
SHARES | |
BENEFICIALLY -------------------------------------------------------------------
OWNED BY | 8 |SHARED VOTING POWER
EACH | |
REPORTING | |
PERSON -------------------------------------------------------------------
WITH | 9 |SOLE DISPOSITIVE POWER
| |
| |607,961 SHARES
-------------------------------------------------------------------
|10 |SHARED DISPOSITIVE POWER
| |
| |
- --------------------------------------------------------------------------------
11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
|
| 607,961 SHARES
- --------------------------------------------------------------------------------
12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
| SHARES* [ ]
|
- --------------------------------------------------------------------------------
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
|
| 21.4%
- --------------------------------------------------------------------------------
14 | TYPE OF REPORTING PERSON *
|
| BD
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 4
Page 4 of 9 Pages
Item 1. Security and Issuer
This statement relates to the common stock, par value $.01 per share
(the "Common Stock") and the preferred stock, par value $9.00 per share (the
"Preferred Stock"), issued by Southmark Corporation, a Georgia corporation (the
"Company"), whose principal executive offices are located at 2711 LBJ Freeway,
Suite 950, Dallas, Texas 75234.
Item 2. Identity and Background
(a) The statement is filed by Grace Brothers, Ltd., an Illinois
limited partnership ("Grace"). Bradford T. Whitmore ("Whitmore") and Spurgeon
Corporation ("Spurgeon") are the general partners of Grace.
(b) The business address of Grace and Whitmore is 1560 Sherman
Avenue, Suite 900, Evanston, Illinois 60201. The business address of Spurgeon
is 28W100 St. Charles Road, West Chicago, Illinois 60185.
(c) The principal business of Grace is to purchase, sell, invest
and trade in securities. Whitmore's principal occupation is that of being a
general partner of Grace. The principal business of Spurgeon is that of being
a general partner of Grace. The names, business addresses, and present
principal occupation or employment of each director and executive officer of
Spurgeon are set forth in Schedule A hereto.
(d) None of the persons referred to in this Item 2 has, during the
last five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) None of the persons referred to in this Item 2 has, during the
last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
<PAGE> 5
Page 5 of 9 Pages
(f) Grace is an Illinois limited partnership and Spurgeon is an Illinois
corporation. Whitmore is a citizen of the United States.
Item 3. Source of Amount of Funds
The net investment cost of Common Stock and Preferred Stock beneficially
owned by Grace is $205,428.
The Common Stock and Preferred Stock beneficially owned by Grace was
purchased with working capital and partnership funds and is kept in Grace's
margin accounts with Bear, Stearns & Co., Inc. and Lehman Brothers Inc., which
accounts may from time to time have debit balances. Since other securities are
held in such accounts, it is impracticable to determine the amounts, if any,
borrowed with respect to the Common Stock and Preferred Stock, and interest
costs vary with applicable costs and account balances.
Item 4. Purpose of Transaction
This Schedule 13(d) filing is being made because Grace has determined
that it no longer holds its shares without any purpose of changing or
influencing the control of Southmark, and therefore, Grace will no longer make
Schedule 13(g) filings. Grace is dissatisfied with the compensation of, and
certain actions taken by, the present directors and senior management of
Southmark, and believes that changes are necessary in order to maximize the
liquidation recovery of Southmark's shareholders.
Grace intends to continue to monitor the activities of the board of
directors and senior management of Southmark and may discuss its concerns with a
limited number of other shareholders. Grace may choose to solicit consents from
other preferred shareholders and/or vote its shares so as to remove the existing
directors and elect a new board of directors.
Except as set forth in this Item 4, Grace does not have any present plans
or proposals which would result in any of the actions enumerated in clauses (a)
- - (j) of Item 4 of Schedule 13D under the Act.
<PAGE> 6
Page 6 of 9 Pages
Item 5. Interest in Securities of the Issuer.
(a) Grace presently holds a total of 6,773,998 shares of the
Common Stock, which, according to Southmark's most recent 10-Q represents
approximately 18.4% of the Common Stock outstanding. Grace also holds a total
of 607,961 shares of Preferred Stock, which, according to Southmark's most
recent 10-Q, represents approximately 21.4% of the Preferred Stock outstanding.
(b) Grace has the sole power to vote and dispose of the Common
Stock and the Preferred Stock.
(c) The transactions in Preferred Stock and the Common Stock by the
Filers during the period from May 17, 1996 to July 17, 1996 are set forth on
Schedule B hereto.
(d) No person other than each respective owner referred to herein
of Common Stock or Preferred Stock is known to have the right to receive, or
the power to direct the receipt of, dividends from or the proceeds from the
sale of such shares of Common Stock or Preferred Stock.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Grace does not have any contracts, arrangements, understandings or
relationships with any other person with respect to any securities of Southmark.
Item 7. Items to be filed as Exhibits.
None
<PAGE> 7
Page 7 of 9 Pages
SIGNATURE
Grace Brothers, Ltd., after reasonable inquiry and to the best of its
knowledge and belief, certify that the information set forth in this statement
is true, complete and correct.
Grace Brothers, Ltd.
By:
---------------------
Bradford T. Whitmore
General Partner
Grace Brothers, Ltd.
Dated July 26, 1996
<PAGE> 8
Page 8 of 9 Pages
SCHEDULE A
Directors and Executive Officers of Spurgeon Corporation*
Principal Position
With Spurgeon,
Name & Business Address Occupation
- ------------------------ -------------------
Robert D. Van Kampen Sole shareholder
926 Robbins Road, Ste. 180 Director and President of
Grand Haven, MI 49417 Spurgeon. General Partner,
Van Kampen Asset
Management.
David J. Allen Vice President and
28W100 St. Charles Road Secretary of Spurgeon.
West Chicago, IL 60185 General Partner and
Counsel of Van Kampen
Asset Management.
Jerry A. Trannel Treasurer of Spurgeon.
28W100 St. Charles Road Controller of Grace
West Chicago, IL 60185 Brothers, Ltd. Controller
Van Kampen Asset
Management
_______________________
*All are United States Citizens
The business address of Van Kampen Asset Management is 28W100 St.
Charles Road, West Chicago, IL 60185. The principal business of Van Kampen
Asset Management is investment and asset management.
<PAGE> 9
Page 9 of 9 Pages
SCHEDULE B
TRADE ACTIVITY FOR SOUTHMARK CORPORATION PREFERRED STOCK
Trade # Shares
Date Acquired Price
- ---- -------- -----
07/12/96 5,000 $2.375
