Report 2016-133 Recommendation 8 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 #8 To: State Assistance Fund for Enterprise, Business, and Industrial Development Corporation (SAFE-BIDCO)

SAFE-BIDCO should by October 2017 create one central report that includes revenue goals and actual performance for each program it operates to ensure that decision makers, such as the board of directors, Legislature, and other stakeholders have sufficient information to assess its performance.

6-Month Agency Response

SAFE-BIDCO did not provide a response for the reason noted below in the State Auditor's Assessment of Status.

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

A single tracking report is being created and will be introduced at the September 2017 Board meeting for Board approval.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2016-133

Agency responses received are posted verbatim.