THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, July 27, 1994 TAG: 9407270451
SECTION: LOCAL PAGE: D3 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 68 lines
John F. Rixey, a Virginia Beach lawyer and former member of the House of Delegates, testified Tuesday that two real estate investments strained his personal finances in the late 1980s and precipitated his filing for personal bankruptcy in June.
In a Chapter 11 filing with the U.S. Bankruptcy Court in Norfolk late last month, Rixey listed assets of $871,390 and liabilities of $1.03 million.
Chapter 11 allows a debtor to continue doing business while attempting to restructure his debts under court supervision.
Rixey's liabilities included $267,800 of back taxes owed to the Internal Revenue Service, the Virginia Department of Taxation and the city of Virginia Beach. He also listed a debt of $299,266 to Princess Anne Bank secured by his Virginia Beach home.
Rixey, 67, who shares a law office in Virginia Beach with his son, J. Barbour Rixey, said in his bankruptcy filing that his business income totaled $196,979 last year and $174,000 in 1992.
The son of a prominent Norfolk lawyer and grandson of a congressman, Rixey was elected to the House of Delegates in 1953 at age 27. He was a delegate from Norfolk until stepping down in 1959.
Rixey remained active in local politics during the 1960s and lost a bid in 1968 for the Democratic Party nomination for the U.S. House seat from Norfolk and Portsmouth.
Rixey, who also was active in local business circles, helped organize the First National Bank of Norfolk in 1964 and became its first chairman. The bank evolved into Dominion Bank of Greater Hampton Roads, which became part of Charlotte-based First Union Corp. in 1993.
During a creditors' hearing Tuesday, Rixey and his attorney said Rixey had been liable for $400,000 of federal taxes and penalties from sales of commercial real estate in 1985 or 1986. In the wake of these transactions, Rixey was saddled with significant tax liabilities from the ``recapture'' of depreciation he had taken on the investments in earlier years, said his attorney, Robert V. Roussos. In a compromise with Rixey, the IRS agreed to accept $240,000, and Rixey has paid a portion of that, Roussos said.
Rixey's bankruptcy petition listed debts of $218,098 to the IRS, $35,000 to the Virginia Department of Taxation and $14,731 to the Virginia Beach treasurer's office.
Roussos said Rixey resorted to bankruptcy after efforts to refinance a $300,000 home loan fell through and Princess Anne Bank tried to foreclose on his residence at 705 Cavalier Drive.
``He had hoped to get new financing from Commerce Bank, but there was not enough time'' to arrange a new loan before Princess Anne Bank attempted to foreclose, Roussos said.
In a motion filed with the bankruptcy court June 28, Princess Anne Bank said Rixey defaulted on the loan last October and it asked the court for permission to proceed with foreclosure. The bank said it lent Rixey and his wife $600,000 in 1988 to build their Cavalier Drive home. The Rixeys later reduced the principal of the loan to $300,000, the bank said.
A court hearing on Princess Anne's motion to proceed with foreclosure is set for Aug. 31.
Roussos said Rixey expects to restructure his debts by selling commercial real estate in which he has an interest and by arranging new bank financing for his home.
Roussos said he expected Rixey to file a plan for reorganizing his debts by the end of August. by CNB