Wilshire Financial Services Group fired chief executive officer Andrew Wiederhorn and his co-founder on Monday and named turnaround expert Steven Glennon as its new CEO.
Mr. Wiederhorn, 33, and longtime president Lawrence Mendelsohn, 38, rejected the option of remaining on the Portland, Ore., finance company's board. Instead they said they would focus on running Wilshire Financial Real Estate Investment Trust, a separately capitalized company that has shared facilities with Wilshire Financial.
The firings followed an order Thursday by Multnomah County Circuit Court Judge Frank Beardon to remove Mr. Wiederhorn and Mr. Mendelsohn from the company headquarters and relocate them and the REIT, of which the two are the only employees, to more modest office space in another building owned by Wilshire. In announcing the appointment of Mr. Glennon, the board released a statement saying that "the company would be best served by the appointment of new management."
Wilshire, founded in 1987, underwent a bankruptcy restructuring this year that changed the makeup of its board. The new board, questioning Mr. Wiederhorn's fast-growth strategy, suspended him and Mr. Mendelsohn on Aug. 19. As a result, the two were removed from the building. But they got a court order to return temporarily to the building where both Wilshire Financial and the REIT were housed.
The fate of the REIT in its new location is in question. According to a local newspaper account, the REIT has not paid its fees under a February "facilities sharing agreement" with Wilshire Financial. The REIT owes more than $800,000 for April, May, and June, the newspaper said.
Mr. Glennon, 55, and Aaron Brown joined Wilshire as consultants last month to help lead the company's post-bankruptcy reorganization. Mr. Glennon testified Thursday that the company's employees are uncertain about who is running the company and that he considered the REIT, which is seeking to end its tax-exempt status, a competitor.
Wilshire Financial is a consumer finance company specializing in underperforming real estate loans. It owns two California thrifts.
In 1994, Mr. Glennon founded Glennon Associates, a company that specializes in the "financial restructuring of distress or turnaround companies," focusing on Chapter 11 and out-of-court restructuring and bondholders' rights representation.