National Gold Exchange of Tampa, Fla., a driving force in the rare coin market for a generation, filed for voluntary protection from its creditors under Chapter 11 of the Federal Bankruptcy Code on July 24, giving breathing room to the brothers Mark and Alan Yaffe and giving the firm a chance to reorganize.

There is about $35 million in secured debt and another $15 million in unsecured debt, according to filings with the U.S. Bankruptcy Court for the Middle District of Florida. The case has been assigned to Judge Michael Williamson.

Sovereign Bank of Providence, R.I., is the largest creditor with over $35 million listed on the debtor's schedules.

On Monday, July 27, James Thorner of the St. Petersburg Times said in a copyrighted article that Judge Williamson allowed Sovereign Bank to continue to seize collateral in the form of valuable coins it held from NGE to help repay loans made totalling over $35 million.

The Times also reported that NGE was acting on a tip that NGE co-owner Mark Yaffee had used $12 million to $15 million in coins pledged in collateral for the $35 million business loan for impermissible purposes - to build a $25 million residential mansion in Avila, Fla.

Sovereign called in the loan and attempted to confiscate the coins, typical of the way that most secured transactions work when the lender is insecure.

Unsecured creditors include A-Mark, American Coin, American Express, Brian Fazio and Bruce Kutscher, Emporium Hamburg,, Gene Sanders, Kirk Kelly, Liberty Coin Galleries, Republic National Business, and several others.

Unsecured creditor sums range from amounts as low as about $1,800 to $5.5 million.

Mark and Alan Yaffe are owner-directors of NGE. The company Web site claims to be the world's largest gold coin and silver wholesalers. The same Web site lists offices in Zurich, Brussels and Paris in addition to Tampa headquarters.

Some of the unsecured creditors are European banks.

Bankruptcy laws offer a debtor a period of 180 days protection during which time creditors can proceed slowly and deliberately, but not in a suffocating manner, while the debtor puts forth a plan of reorganization. Creditors may form a committee and offer a competing vision of the future of the company.

NGE's saga began July 21 with the filing of a 17-page complaint in Hillsborough County Court against National, a European subsidiary and the Yaffe brothers. It claims that the firm borrowed more than $4 million over the amount permitted by its credit agreement.

The judge asked both sides to reconvene in court on Aug. 3. NGE would like access to its coins so that it can continue to operate its business.

James Thorner of the St. Peterburg Times contributed to this report.

Numismaster