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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported):
March 29, 1996
EQUIVEST FINANCE, INC.
(Exact Name of registrant as specified in its charter)
Florida 0-18201 5-23465270
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
Two Clinton Square, Syracuse, New York 13202
(Address of principal executive offices)
(315) 422-9000
Registrant's telephone number, including area code
7777 Davie Road Extension, Hollywood, Florida 33024
(Former name or former address, if changed since last report)
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Item 3. Bankruptcy or Receivership.
On March 29, 1996, The Bennett Funding Group, Inc. ("BFG") and
Bennett Management & Development Corp. ("BMDC") and several of their respective
affiliates filed voluntary petitions (the "Petitions") for reorganization (as to
BFG and BMDC, Case Nos. 96-61376 and 96-61379, respectively) under Chapter 11 of
the United States Bankruptcy Code in the United States Bankruptcy Court for the
Northern District of New York. BFG and BMDC together own approximately 86% of
the common stock, par value $.05 per share (the "Common Stock"), of Equivest
Finance, Inc. (the "Registrant"), after giving effect to the conversion of the
Registrant's Convertible Preferred Stock, par value $3.00 per share. On April
18, 1996, the Department of Justice appointed, and the Bankruptcy Court approved
the Hon. Richard C. Breeden as the trustee in bankruptcy (the "Trustee") for BFG
and BMDC and various affiliated companies.
The Petitions were filed after (i) the Securities and Exchange
Commission filed a civil complaint (the "Civil Complaint") in the United States
District Court for the Southern District of New York (the "Court") against BFG,
BMDC, Bennett Receivables Corporation, Bennett Receivables Corporation - II and
Patrick R. Bennett, the Chief Financial Officer of BFG (No. 96 Civ. 2237 (JES)),
alleging numerous violations of the anti-fraud provisions of the federal
securities laws based in part on allegations of sales of fictitious leases,
fraudulent misrepresentations to investors in private placements of debt
securities and misappropriation of corporate assets and (ii) the United States
Attorney for the Southern District of New York filed a criminal complaint (the
"Criminal Complaint") in the Court against Patrick Bennett alleging criminal
violations of the anti-fraud provisions of the federal securities laws and
perjury.
Resort Funding, Inc. ("Resort Funding"; formerly known as
Bennett Funding International, Ltd.), the Registrant's sole operating business,
was acquired from BFG in February 1996. Resort Funding has been operated
independently of the operations of BFG and BMDC that are the subject of the
allegations in the Civil Complaint, and it has realized net profits in each of
the last two fiscal years. Nevertheless, uncertainties surrounding the
Petitions,(1) the Civil complaint, the Criminal Complaint and
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(1) One of the bankrupt Bennett entities is Resort Service
Company, Inc. ("RSC"), which at an earlier time was once
known as "Resort Funding", Inc. Though the previous name of
RSC was identical to the current name of Resort Funding,
these at all times have been entirely separate corporate
entities, and there is no connection between RSC and the
company now known as Resort Funding. Because of the prior
use by RSC of the Resort Funding name, a certain level of
confusion has resulted due to erroneous press reports that
(continued...)
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whether the Trustee would challenge the February 1996 acquisition have made it
unclear whether the Registrant and Resort Funding can continue to obtain the
funds needed to operate its resort timeshare finance business. Since the filing
of the Petitions, the Registrant has been making efforts to address these
concerns.
On March 4, 1997, the Registrant announced that the Trustee
had advised the Registrant that he does not intend to challenge the February
1996 transaction pursuant to which the Registrant acquired Resort Funding.
Resort Funding owes BFG approximately $24 million pursuant to
two promissory notes, which originally were structured as demand instruments.
The United States Bankruptcy Court for the Northern District of New York
recently approved a petition of the Trustee to exchange new notes for the
original demand notes. The new notes will have the same terms as the demand
notes, except that absent an event of default as defined therein the principal
amount of the new notes may not be called before January 15, 1998.
The Registrant, in December 1996, completed renegotiation of
Resort Funding's 8% Notes Due 1995. As part of the renegotiation, Resort Funding
exchanged the 8% Notes Due 1995 for 8% Notes Due 1998.
In addition, Resort Funding recently completed closings on a
number of loans received from banks as part of settlements of litigation between
such banks and the Trustee on behalf of BFG and Aloha Capital Corporation,
another Bennett Company now in bankruptcy proceedings. Under the terms of these
settlements the banks extended new loans to Resort Funding. Over time, these
loan arrangements can provide funds to Resort Funding to finance its vacation
interval lending activities at an effective interest cost to Resort Funding of
approximately 4% per annum for periods of up to 7 years. To date, the banks have
agreed to lend more than $21 million to Resort Funding as part of these
arrangements of which approximately $9 million is now available to Resort
Funding and the remainder of which will become available over approximately the
next 3 years.
Item 4. Changes in Registrant's Certifying Accountant
On April 5, 1996, the Registrant received a letter from Puritz
& Weintraub, the Registrant's independent accountants, stating that such firm
was resigning as the Registrant's auditor effective as of the date of such
letter. The opinions of Puritz & Weintraub with respect to the financial
statements of the
(1)(...continued)
the current Resort Funding has filed for bankruptcy protection.
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Registrant for the periods ended August 31, 1994 and 1995 and December 31, 1995
did not contain any adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principles,
nor has there been any disagreement as to any matter of accounting principles or
practices, financial statement disclosure or audit scope or procedure during the
Registrant's two most recent fiscal years or any subsequent interim period.
On March 29, 1996, Mahoney Cohen Rashba & Pokart, CPA, PC
("Mahoney Cohen") sent a letter to BFG resigning as BFG's auditor and
withdrawing its reports on all financial statements of BFG and its related
entities including Resort Funding. A copy of the letter is annexed hereto as
Exhibit 1 and incorporated herein by reference. In the letter, Mahoney Cohen
stated that such financial statements were based on, among other things,
information supplied by Patrick Bennett and, in light of the allegations in the
Civil Complaint, including allegations that Mr. Bennett had provided Mahoney
Cohen with false and materially misleading information relating to BFG and BMDC,
Mahoney Cohen had no choice but to withdraw its reports on such financial
statements.
Although there were no allegations in the Civil Complaint that
Mr. Bennett had provided false or materially misleading information regarding
Resort Funding to Mahoney Cohen in connection with its reports on Resort
Funding's financial statements, Mahoney Cohen nevertheless subsequently
confirmed that its letter of resignation and withdrawal covered reports on
financial statements of Resort Funding (formerly known as Bennett Funding
International, Ltd.), as well. Prior to such resignation and withdrawal of
reports, Resort Funding had had no disagreements with Mahoney Cohen as to any
matter of accounting principles or practices, financial statement disclosure or
audit scope or procedure, and Mahoney Cohen's reports on its financial
statements did not contain any adverse opinion or disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope or accounting
principles.
Such resignations were not recommended or approved by the
Registrant's board of directors or any audit or other committee thereof. The
Registrant has requested that Puritz & Weintraub and Mahoney Cohen state by
letter whether they agree or disagree with the statements herein relating to
their respective resignations. Such letter responses will be filed by amendment
to this Report on Form 8-K.
On January 24, 1997, Firley, Moran, Freer & Eassa, P.C.
was appointed by the Registrant as its independent accounting firm.
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Item 5. Other Events
On March 29, 1996, the NASDAQ Stock Market, Inc. advised the
Registrant that, in light of the Civil Complaint, the Registrant's request for
relisting on The NASDAQ Stock Market was being denied at that time.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
The following exhibits are being filed herewith:
1. Letter dated March 29, 1996 from Mahoney Cohen
Rashba & Pokart, CPA, PC to The Bennett Funding
Group, Inc. et al.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of
1934, the Registrant had duly caused this report to be signed by the undersigned
hereunto duly authorized.
EQUIVEST FINANCE, INC.
By: /s/ Thomas J. Hamel
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Thomas J. Hamel, Director
Dated: March 10, 1997
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EXHIBIT INDEX
Exhibit
Number Description Page No.
- ------- ----------- --------
1 Letter dated March 29, 1996 from Mahoney
Cohen Rashba & Pokart, CPA, PC to The Bennett
Funding Group, Inc. et al.
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EXHIBIT 1
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MCRP
MAHONEY COHEN RASHBA & POKART, CPA, PC
March 29, 1996
VIA TELECOPIER
Mr. Michael Bennett
Mr. Patrick Bennett
Mr. Dick Kelley
Mr. William Lester
The Bennett Funding Group, Inc.
Two Clinton Square
Syracuse, NY 13202
Re: The Bennett Funding Group, Inc.
Dear Sirs:
It has come to our attention that on Thursday, March 28, 1996 the
United States Securities and Exchange Commission (the "SEC") commenced an action
against, among others, Bennett Funding Group, Inc. ("BFG"), Bennett Management &
Development Corporation ("BMDC") and Patrick Bennett ("Bennett").
Our attorneys have asked your counsel for a copy of the SEC's Complaint
and accompanying affidavits but have been told that the same is under seal and
cannot be reviewed by us, your auditors, or by our counsel, Herrick, Feinstein
LLP. We have also learned that the SEC has alleged that Bennett and BFG sold
$55,000,000 of fictitious New York City Transit Authority leases and that BFG on
numerous occasions sold the same lease(s) more than once. We further understand
from your counsel that the SEC's Complaint alleges that BFG and Bennett lied to
its auditors. Finally, we have learned that Patrick Bennett has resigned from
BFG and that he was arraigned yesterday on charges of perjury.
CERTIFIED PUBLIC ACCOUNTANTS
111 WEST 40TH STREET, NEW YORK, NY 10018 TEL 212 490-8000 FAX 212 398-0267
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Mr. Michael Bennett
Mr. Patrick Bennett
Mr. Dick Kelley
Mr. William Lester
The Bennett Funding Group, Inc. March 29, 1996
In light of the serious nature of the foregoing, effective immediately
we are withdrawing as your auditors and we withdraw all financial statements and
the reports thereon issued by us relating to BFG and its related entities. The
audits of those financial statements were based upon, among other things,
information given to us by Patrick Bennett and in light of his resignation and
the allegations of financial impropriety and our present inability to review the
SEC's Complaint and accompanying affidavits, we have no choice but to withdraw
our reports on those financial statements. Therefore, you may not use those
financial statements for any purpose whatsoever. Please immediately advise your
lenders, brokerage firms and others to whom you have previously sent the
financial statements of our resignation and the withdrawal of our reports.
Very truly yours,
MAHONEY COHEN RASHBA & POKART, CPA, PC
/s/ MAHONEY COHEN RASHBA & POKART, CPA, PC
cc: Arthur G. Jakoby, Esquire
Barry Rashkover, Esquire
Richard Marshall, Esquire
CERTIFIED PUBLIC ACCOUNTANTS
111 WEST 40TH STREET, NEW YORK, NY 10018 TEL 212 490-8000 FAX 212 398-0267
