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OMD APPROVAL
OMD Number: 3235-0145
Expires: October 31, 1997
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No.____2____)
Southmark Corporation
- -----------------------------------------
(Name of Issuer)
Preferred Stock
- -----------------------------------------
(Title of Class Securities)
844544882
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(CUSIP Number)
David J. Allen, Esquire, 28 W100 St. Charles Rd., West
Chicago, Il 60185 (708) 231-2625
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(Name, Address and Telephone Number of Person Authorized to
Receive Notice and Communications)
January 6, 1997
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(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 13-1(b) (3) or (4), check the following box / /.
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).
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SCHEDULE 13D
CUSIP NO. 844544882 PAGE 2 OF 5 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, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2 (d) OR 2 (e)/ /
6 CITIZENSHIP OR PLACE OR ORGANIZATION
ILLINOIS LIMITED PARTNERSHIP
7 SOLE VOTING POWER
NUMBER OF 670,471 SHARES
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 670,471 SHARES
WITH 10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
670,471 SHARES
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*/ /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.6%
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.
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Page 3 of 5 Pages
Item 1. Security and Issuer
This statement relates to 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 3. Source and Amount of Funds
The 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 Preferred Stock, and interest
costs vary with applicable costs and account balances.
Item 4. Purpose of Transaction
This 13D is being filed to reflect the following occurrence:
On January 6, 1997, Grace Brothers, Ltd. bought 20,000 shares
of the Preferred Stock as detailed on Schedule B.
Except as set forth herein, Grace has no plans or proposals
which relate to or would result in any of the actions set
forth in subparagraphs (a) through (j) of Item 4 of Schedule
13D under the Act.
Item 5. Interest in Securities of the Issuer.
(a) Grace presently holds a total of 670,471 shares of
Preferred Stock, which, according to Southmark's most recent
10-Q, represents approximately 23.6% of the Preferred Stock
outstanding.
(b) Grace has the sole power to vote and dispose of the
Preferred Stock.
(c) The transactions in Preferred Stock by the Filers during
the period from November 6, 1996 to January 6, 1997 are set
forth on Schedule B hereto.
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Page 4 of 5 Pages
(d) No person other than each respective owner referred to
herein of 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.
(e) Not applicable.
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
SIGNATURE
Grace Brothers, Ltd., after reasonable inquiry and to the
best of its knowledge and belief certifies 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: January 6, 1997
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Page 5 of 5 Pages
SCHEDULE B
TRADE ACTIVITY FOR SOUTHMARK CORPORATION PREFERRED STOCK
<TABLE>
<CAPTION>
DATE AMOUNT PRICE/SHARE STOCK
<S> <C> <C> <C>
11/07/96 1,000 $2.875 PREFERRED
12/09/96 1,700 $2.75 PREFERRED
12/11/96 7,500 $2.8 PREFERRED
01/03/97 2,000 $2.625 PREFERRED
01/06/97 20,000 $2.7187 PREFERRED
</TABLE>
