The NCUA said it is hoping to finalize a sale prior to the end of the year. Meanwhile, Autoland continues to conduct business as usual.

Formed in 1971, Autoland became a credit union-owned entity in 2007 through Telesis and two other California cooperatives, the $3 billion Kinecta Federal Credit Union in Manhattan Beach and the $29 million California Agribusiness Credit Union in Buena Park, through CU Vehicles LLC, a holding company owned by the credit unions.

At the time of liquidation, Telesis served approximately 37,600 members and had $301.3 million in assets. On June 1, Premier America purchased and assumed Telesis' members, deposits, core facilities and consumer loans.

The most current financials showed that Telesis had a $3.8 million investment in CU Vehicles, an aggregate cash outlay of $12.5 million and a $2.3 million loan to Autoland.

As the NCUA moves forward with the sale of Telesis' stake in Autoland, at least one company has expressed strong interest in acquiring those assets as it seeks to build a presence in California.

Auto Solution Inc., a vehicle brokerage firm that it said works with more than 300 credit unions in Oregon, Washington and the Northwest, contacted the NCUA shortly after Telesis was liquidated to request information on the potential bidding process for Autoland, said Mark Loebner, owner of ASI.

He said he was told that only credit unions and CUSOs may bid on Autoland and those are the only ones who are eligible to receive a bidding package. A representative with the NCUA's Asset Management Assistance Center said ASI could not bid because it is a competitor to Autoland, Loebner said.

The AMAC conducts credit union liquidations and performs management and recovery of assets. The office also assists the NCUA's regional offices with the review of complex loan portfolios actual or potential bond claims, conservatorships and records reconstruction.

"The lady at the AMAC said 'no,' the packets are only offered to credit unions, which seemed strange to me," Loebner told Credit Union Times. "I thought I was uniquely suited to run Autoland given that I've been in this type of business for 20 years." 

Loebner didn't stop his pursuit. He asked a credit union colleague to ask the AMAC for a bidding package. The credit union signed a nondisclosure agreement but was not given a bidding package, Loebner said. When his multiple requests for an explanation on why the credit union was not given the information went unanswered, Loebner contacted Lawrence Reichman, an attorney with Perkins Coie LLP in Portland, Ore.

Despite a series of emails, faxes, letters and phone calls, neither Reichman or Loebner were able to get any additional information on why the credit union colleague was not given a bidding package and why the AMAC would not consider other bidders besides credit unions or CUSOs.

"As Telesis' experience shows, credit unions and CUSOs may not be in the best position to operate an auto brokerage service and thus, may not fairly value the operation," Reichman wrote in a July 13 letter to NCUA General Counsel Michael McKenna, provided to Credit Union Times by Loebner.

Reichman said if a credit union or CUSO were to acquire the operation, there is a significant risk they will not operate it profitably, which could ultimately threaten the stability of the credit union. At the very least, the NCUA should open up the bidding process to ensure that the best value is received for Autoland, Reichman said.

The NCUA did not respond to questions about ASI's requests, its bidding process or which entities had placed bids.

In the end, it is unlikely that the NCUA will seek bidders other than credit unions or CUSOs, said Steve Sala, principal with SFE Advisors, a consulting firm that does workouts, counsels senior management through execution of corrective action orders and serves as a third-party loan review function for credit unions and banks.

"The NCUA clearly serves the credit union industry," Sala said. "If at all possible, it will find an option that allows the operation to remain connected with credit unions."

Sala said in the case of Telesis' stake in Business Partners LLC, a business lending CUSO founded by the credit union, the NCUA most likely asked Premier America and the CUSO's credit union partners if they were interested but received no takers.

"The thing you have to always remember is the NCUA's job is to minimize the cost to the insurance fund," Sala said. "When they evaluate all their options, they will figure out which option will pose the lease risk to the insurance fund."

The NCUA may go as far as dissolving Telesis' investment in Autoland or even explore having a note sale for the entire portfolio, Sala said.

"They're not in the business of running things like this," he explained. "When appropriate and at such a time that it turns out they have found an exit, they will use the appropriate exit strategy."

Meanwhile, Loebner said the NCUA's bidding process needs to be re-examined. For some additional guidance, he even contacted Rep. Suzanne Bonamici (D-Ore.).

" Loebner has brought this matter to the attention of his congressional representative because it appears that a federal government agency is not appropriately performing its duties," Reichman said.

Loebner is convinced that the NCUA is trying to rush the sale of Telesis' stake in Autoland. He said he was told that the AMAC wants to finalize the transaction by September.

"I'm not trying to ruffle feathers," he said. "It's just that if someone is offering fair value, it should be worth more to someone who knows how to run this type of business."