HOLDING ON
Twilight for a raider

© by Mark Reutter

Judge Warren Bentz, of U.S. Bankruptcy Court in Erie, Pa., is now considering a proposal by Castle-Harlan, a merchant bank, to buy Sharon’s steel-related assets. Even if the proposal goes through, lawyers involved in the reorganization say it will take years to clear up Sharon’s balance sheet, including the disposition of claims by creditors for more than $50 million in damages against Posner.

By that time, Posner may be confronted with yet another ticking time bomb: the due dates for $250 million in junk bonds issued by Drexel Burnham Lambert in the go-go 1980s. With the junk-bond market in tatters and Drexel itself under Chapter 11 bankruptcy protection, it seems unlikely that Posner could push back the day of reckoning.

At the moment, he is in the uncomfortable position of relying on the forbearance of investor Carl Lindner, who loaned DWG $50 million to stay afloat, and Maurice R. “Hank” Greenberg, whose American International Group (AIG) holds the construction performance bonds for Fischbach. Lindner and Greenberg could probably squeeze Posner out of DWG and Fischbach, but then they would have to run the businesses. Neither of them appears excited by the prospect.

Which brings up a final question: who will succeed the dean of corporate raiders? As the old buccaneer approaches his 72nd birthday, he would seem to be approaching the limits of his working life. While stashing away his riches in family-controlled trusts – Posner is worth $295 million, according to Forbes, though this might prove to be illusory given his legal problems – he has no known succession plan.

The heir apparent is Steven, 47. Described as smart, spoiled, and “a wheeler-dealer like his father,” Steven is not perceived as having the judgment or independence necessary to turn around such a troubled enterprise. Moreover, he is awash in his own financial difficulties. A judge recently ordered him to pay nearly $100,000 in overdue rent on his East Side apartment in New York. In spite of his high salary and bonuses, Steven has $1 million in judgments pending against him in New York and has been hit with a foreclosure suit on his $1.1 million penthouse condo in Miami.

Steven’s twin sister, Gail, has pursued a life of leisure, while Tracy and Troy, the children of Victor’s second marriage, have had intermittent involvement in the business. Tracy was made a vice president of Evans Products and Sharon Steel following her graduation from Cornell University. With both companies now stripped from Posner, she faces a less secure future. She recently moved to California.

Troy, the youngest, once worked for Victor’s development firm in Maryland, supervising the Oakhurst subdivision in Baltimore County. In February 1987, Troy was found guilty in Baltimore County Circuit Court for distributing cocaine. Represented by one of Baltimore’s top attorneys, he got a two-year suspended sentence and was fined $2,500. A year later, Troy’s firm, Stipa Posner Developers, failed. He has also moved to California.

As it now stands, perhaps the chief beneficiaries of Posner’s ebbing empire will not be aggrieved stockholders or hard-pressed employees, or even Victor’s family, but lawyers and accountants. Cleaning up the Augean stables of Posner’s kingdom will require fact-finding, court orders, audits, negotiations, appeals – in short, a treasure trove of litigation, according to Herbert Minkel, co-counsel for Sharon’s creditors.

“When you look at the structure of his companies, there’s lots of assets, lots of companies, and lots of pieces,” Minkel says. “It’s hard to get to his assets because he’s protected a lot of them in trusts. You won’t track down and liquidate them in his lifetime. He litigates, has deep pockets, and has great staying power.”

Whatever happens, Minkel and a small army of lawyers are assured of years of work ahead. For Posner, these same years may be painful ones. The man who drained the assets of companies throughout his life now faces the same fate at the hands of others.