Brooke's star tarnished
Published on -12/25/2008, 7:17 AM
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By MIKE CORN
PHILLIPSBURG -- It had been been a shining star, a story of local boy does great.
Today, the buildings that housed Brooke Corp. and its long list of subsidiaries is a harsh reminder of just how quickly a good story can go bad.
Brooke, the creation of founder Rob Orr, had been skyrocketing, adding insurance agents to its system across the nation.
But when Wall Street bankers started calling in loans, the whole deal collapsed.
While Brooke was officially based in Overland Park, its roots were in Phillipsburg.
And when the world came crashing down on Brooke, Phillipsburg took it hard, losing about 150 jobs. Brooke might not have been the largest employer in the city, but it was high on the list.
Problems for Brooke started in early October, soon after Bank of New York Mellon filed a lawsuit in federal court in Kansas City, Kan.
That's when Albert Riederer, a Kansas City-area attorney was appointed as a special master by a federal judge to help sort out differences between the banks and Brooke.
But layoffs soon followed. In the first round, nearly 40 employees were let go.
As agents started seeking releases from Brooke, however, and crisis deepened, additional layoffs were made.
There was a glimmer of hope when Terry Nelson, a banker and farmer from the Norton area, partnered with a southwest Kansas insurance agent and offered to purchase Brooke Insurance, the flagship of the corporation.
But soon, Brooke Corp. and Brooke Capital Corp. filed for Chapter 11 bankruptcy protection.
Then Nelson and his partner withdrew the offer to purchase Brooke Insurance.
Riederer was named trustee of the failing company and virtually all of the employees for Brooke in both Phillipsburg and Overland Park were laid off.
Brooke Corp. listed assets of $512.9 million and liabilities of $447.4 million. Brooke Capital Corp. listed assets of $106.2 million and total debts of $111.7 million.
The bankruptcy petition did not include Generations Bank, a $130 million thrift that was told by federal regulators to either find a merger partner or sell the bank by Dec. 15.
In addition to the financial troubles facing Brooke Corp., the Kansas Insurance Department acknowledged that it has been working with the FBI in investigating Brooke's rapid fall, including its inability to account for all of the premiums it had been paid.
