The Pacific Private Money business was founded in 2010 by Mark Hanf and grew into an "opco/fundco" structure in which a licensed operating company originated and serviced mortgage loans while a series of open-ended investment funds raised the capital. Pacific Private Money, Inc. ("PPMI") held California Department of Real Estate and Department of Financial Protection and Innovation lending licenses and originated substantially all of the loans. The funds — organized as limited liability companies — raised money from investors who attested they were accredited, executed subscription and operating agreements, and received private placement memoranda, with the funds filing Regulation D exemption notices. The pooled capital was lent to developers and other borrowers as loans secured by liens against real estate, as described in the petition and the supporting declaration (Voluntary Petition, Brinkman Declaration).
Pacific Capital Funding Group, Inc. ("PCFG"), incorporated in California in 2020, sits at the top of the structure as the parent holding company and directly or indirectly controls the 11 other operating and fund entities. The full debtor group includes PPMI, Pacific Private Money Group LLC, Private Money Management Group LLC, Pacific Private Money Fund I LLC, Pacific Freedom Fund LLC, Pacific Southwest Note Fund LLC, Pacific Opportunity Fund LLC, Pacific Note Fund Management Group LLC, Pacific Private Money Partners LLC, Pacific Mortgage Capital LLC, Arrival Home Loans LLC, and Arrival Fund I LLC. The cases are proceeding before the Hon. William J. Lafferty under lead case number 26-30538, and the debtors have asked the court to administer all 13 cases jointly under PCFG's caption (Joint Administration Motion).
The declaration breaks out the funds and their investor bases. Pacific Freedom Fund was the largest, with roughly 140 investors and about $75 million in invested capital. Pacific Private Money Fund I held approximately $47 million from about 191 investors. Pacific Southwest Note Fund accounted for roughly $12 million across about 60 investors, Arrival Fund I about $3.8 million from roughly 20 investors, and Pacific Opportunity Fund about $2.2 million from about 12 investors. In aggregate, the funds held approximately $140 million in invested capital across roughly 400 investors and 475 accounts.
Against that capital, the debtors' principal assets as of the petition date consist of a portfolio of roughly 45 mortgage and note assets, about ten real-estate-owned properties acquired through foreclosure, cash, intercompany receivables, and equity interests in affiliated and non-debtor entities. A significant portion of the loan portfolio is non-performing, and the pool of loans available to foreclose on has been shrinking as underlying properties are sold or lost to senior lienholders. (court filing)
The declaration attributes the collapse to a combination of borrower defaults and a sharp rise in market interest rates. Several large borrowers stopped paying. Desmond Gumbs, principal of several borrower LLCs, owes a balance the debtors believe exceeds $20 million including interest and fees; PPMI demanded repayment of his loans on May 19, 2026. Bob West and his affiliate West Coast Land and Development borrowed roughly $12 million on substantially non-performing loans and reached a settlement with PPMI in October 2025. A third borrower, Chris Deluzak, had taken roughly $10 million across about a dozen construction loans before his death in 2021; the debtors say they later learned that loan draws had been misappropriated and that the collateral was largely undeveloped or partially built. Pacific Freedom Fund also made a $5 million equity investment in Scottsdale REI, a non-debtor that may itself be facing insolvency.
Pacific Freedom Fund had been designed to fund mortgage loans and quickly sell them on the secondary market to provide investors with rapid liquidity. When interest rates rose sharply, that secondary market contracted, and by 2023 redemption requests — particularly in the Freedom Fund and Fund I — exceeded available cash. The debtors imposed staff and salary reductions through 2025, then stopped distributions and redemptions late in the year. For most funds, the last payment was made in October 2025 for September 2025 earnings; Arrival Fund made its final distribution in December 2025. On December 24, 2025, management emailed investors warning that going-concern challenges were affecting operations (Brinkman Declaration).
The debtors engaged William R. Brinkman, founder of the San Francisco Bay Area turnaround firm Jigsaw Advisors LLC, as chief restructuring officer in December 2025, and retained Jeffer Mangels & Mitchell LLP as restructuring counsel in January 2026. The remaining workforce was terminated on or about February 4, 2026. Former chief operating officer Nam Phan resigned his roles between January and May 2026, and founder Mark Hanf stepped back from operational management, with Brinkman assuming the powers and duties of chief executive across all debtors.
Beyond investor equity, the debtors' creditor obligations include an approximately $6.2 million unsecured claim held by Saluda Grade arising from a warehouse lending facility, plus a separate $500,000 unsecured claim tied to PCFG's buy-back of Saluda Grade's roughly 22% interest in the parent. Edward Brown asserts an approximately $600,000 claim purportedly secured by a UCC-1 he perfected on June 8, 2026 — days before the filing — which the debtors believe is avoidable. Other claims include a roughly $520,000 promissory note held by Mikhail Brodsky and convertible notes of $300,000 and $125,000 held by Kevin Albert and Thomas Kolassa. The debtors estimate 75 to 100 general unsecured creditors with aggregate claims of roughly $500,000 to $750,000. (court filing)
The bankruptcy lands amid a thicket of litigation and government scrutiny. The debtors and certain current and former officers are defendants in several investor and counterparty suits, most in Marin County Superior Court, including matters brought by Brodsky, the Descalso parties, Santa Cruz Imports, Kevin Albert, and Ronald Lachman, along with a WE Alliance action in the Northern District of California. The DFPI opened an investigation in late 2025, suspended PPMI's California lending license on March 16, 2026, and on May 4, 2026 issued a Desist and Refrain Order against PPMI, Hanf, and Phan under the Corporate Securities Law of 1968. The declaration further discloses ongoing investigations by the U.S. Securities and Exchange Commission, the Department of Justice, the Federal Bureau of Investigation, and the Internal Revenue Service into the Pacific Private Money entities' practices.
Citing those investigations and a number of elderly investors, the debtors have asked the court for authority to file a redacted creditor mailing matrix that shields personal identifying information (Motion to Redact Mailing Matrix). The debtors also moved to extend the deadline to file their schedules and statements of financial affairs, citing 13 debtors, more than 500 investors, and only a handful of former employees assisting on a part-time basis (Motion to Extend Schedules Deadline). A motion to approve debtor-in-possession financing is expected to follow in the coming days. The court has set a hearing on the procedural first-day motions for June 26, 2026, before Judge Lafferty in Oakland.