A federal judge has dismissed a bankruptcy filing by three Maine housing companies linked to former Portland developer Michael Liberty.

Pine State Housing, Montfort Housing and Birch Ridge Limited Partnership filed for bankruptcy on Jan. 30, seeking protection from creditors while they reorganized debts. But Stanford Management, which oversaw operation of the hundreds of apartments owned by the three companies, challenged the filing, saying it was an attempt to gain leverage over the management company in contract disputes.

“These Chapter 11 cases are bad faith filings that serve no reorganizational purpose,” Stanford said in a motion to dismiss the bankruptcy action filed on March 20.

Related Three Maine housing companies with ties to Michael Liberty file for bankruptcy

The filing said that the ownership had been unable to cancel contracts with Stanford Management for cause, so the bankruptcy filing was a way to try to accomplish that as part of a court-overseen reorganization.

The three companies own hundreds of apartment units across the state and have continued to operate while the matter was in court. The complexes provide housing for the elderly, disabled and low-income residents, and include the Munjoy South complex in Portland and a development called the Birches in Old Orchard Beach.

Stanford Management said that on the date the companies filed for bankruptcy, the companies also sought to install a new management firm that is owned or controlled by people associated with Liberty, who is listed as a general partner of the housing firms.

Bankruptcy Judge Peter Cary apparently agreed with Stanford Management’s arguments, dismissing the case on March 27.

It’s a significant legal setback for Liberty, who grew up in Gray and was a major developer in Portland in the late 1980s.

Last year, he was sentenced by a federal judge in Maine to four months in prison and fined $100,000 for using relatives and employees to avoid campaign finance limits. In Philadelphia, the Securities and Exchange Commission has been seeking to force Liberty to pay his full fine for defrauding investors, and now he faces new charges from the SEC alleging that he and associates defrauded hundreds of investors of millions of dollars related to Mozido, a technology firm he formed in Texas.

Edward D. Murphy can be contacted at 791-6465 or at:

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