Report 2016-133 Recommendation 5 Responses
Report 2016-133: SAFE-BIDCO: At Risk of Insolvency, It Needs Increased Oversight if It Is to Receive State Funding and Continue to Help Small Businesses in California Gain Financing (Release Date: April 2017)
Recommendation #5 To: State Assistance Fund for Enterprise, Business, and Industrial Development Corporation (SAFE-BIDCO)
If it is not established as a program within a state entity, SAFE-BIDCO should by October 2017 take steps to increase participation on its subcommittees by its board members, such as by assigning board members to subcommittees, to receive the full range of experience and expertise of its board members.
6-Month Agency Response
SAFE-BIDCO did not provide a response for the reason noted below in the State Auditor's Assessment of Status.
- Estimated Completion Date:
- Response Date: December 2017
California State Auditor's Assessment of 6-Month Status: Resolved
SAFE-BIDCO was seized by the California Department of Business Oversight (Business Oversight) in September 2017 and is no longer in operation. Business Oversight in July 2017 required SAFE-BIDCO to prepare plans to liquidate the business. On September 15, 2017, citing our April 2017 audit in part, Business Oversight issued an order taking possession of SAFE-BIDCO and appointing an agent to assist in liquidating the entity. Business Oversight noted in its order many of the same concerns we identified in our audit, including SAFE-BIDCO's operating losses, declining capital, and declining loan production. In particular, Business Oversight found that SAFE-BIDCO had no viable plan for improving its sustainability or protecting its creditors. Business Oversight's action to liquidate SAFE-BIDCO has effectively resolved the need for our recommendations.
60-Day Agency Response
Per the corporation's bylaws, the Board of Directors' September meeting is when the Board elects Officers and makes committee appointments.
- Estimated Completion Date: October 2017
- Response Date: June 2017
California State Auditor's Assessment of 60-Day Status: Pending
Agency responses received are posted verbatim.