Phillips' $1B empire threatened: creditors, shareholders seek control of REITs. (Gene Phillips; real estate investment trusts from bankrupt Southmark Co.)

Phillips' $1B empire threatened

Former Southmark Corp. executives Gene Phillips and Bill Friedman could lose control of the new $1 billion empire built from companies they retained when forced to resign from the now-bankrupt company in 1989.

Attorneys in two states have filed motions that, if successful, would prevent Phillips and Friedman from operating five real estate investment trusts and a master limited partnership, which they manage through National Realty Advisors, a company they own.

The men also hold a substantial stake in the publicly traded companies, either personally or through personal companies such as Syntek West Inc.

Advisory fees paid to NRA by the trusts during 1989 totaled about $7 million - $3 million of which ended up in the hands of Phillips and Friedman themselves. According to SEC documents, Phillips received $2 million from NRA that year, and Friedman about $900,000.

Once chairman and vice chairman of Southmark, …