Par Funding, the Philadelphia lender at the center of a government fraud complaint, should be able to pay back its investors, maybe with interest, its lawyers insist.

Responding to the government’s case before a federal judge in Florida, Par lawyers dismissed as “erroneous” the grim picture of its finances sketched last week by a court-appointed receiver after the U.S. Securities and Exchange Commission filed a sweeping lawsuit against the firm’s owners and financial salesmen in Montgomery County and Florida who had pitched it to investors.

At a hearing last Tuesday, lawyers for the receiver said Par Funding is owed about $420 million, much of it by financially shaky borrowers, including one convicted of bank fraud and two others that have filed for bankruptcy protection. It wasn’t likely to collect a significant part of the money, the lawyers said.

But Par Funding’s defense team continued to blame the SEC for the company’s financial troubles. Par raised money from investors and then lent it to merchants as cash advances, charging average interest rates of 50%.

“Had the SEC not brought in a receiver, investors would still be receiving interest, and merchants would be held accountable for their agreements," the lawyers complained.

The Par team told the court that the firm needed to raise only $225 million to repay investors' principal. That would mean, however, forgoing the repayment of millions in interest that investors had been promised.

After weeks of legal wrangling, each of the numerous defendants in the lawsuit has agreed to accept an injunction leaving receiver Ryan Stumphauzer in control of Par until the case reaches trial or a settlement.

The Par lawyers include Alan Futerfas, representing company co-founder Lisa McElhone; James R. Froccaro and Daniel Fridman, representing Joseph LaForte, McElhone’s husband and the firm co-founder; and Bettina Schein, for chief financial officer Joseph Cole Barleta.

In pushing back against the dire forecasts of the receiver, the four lawyers challenged the way he and his staff had characterized the financial status of several of the lender’s 10 largest debtors.

They didn’t challenge the dollar amounts owed by the group — $228 million, more than half of Par’s overall loans and interest outstanding. But they said Par could recoup much of that because those key loans were “significantly collateralized” with liens against borrowers' properties. And at least some of those borrowers have already paid back substantial principal, and owe only interest, they said.

The SEC said Par Funding sold promissory notes that were not properly registered, audited, or insured, and that it misled 1,200 investors about the risk they faced. Many investors in Par Funding were promised returns of up to 14% — and had collected that for many years. In the spring, though, Par cut its return back to 4%, saying that the coronavirus had hurt many merchants. After the SEC lawsuit, payments were halted.

The Par defense team also disputed the receiver’s negative descriptions of the major debtors. They presented a more favorable view, for starters, of B&T Supply Inc., a Long Island-based office and cleaning products supplier. The firm and its affiliates owe Par as much as $91 million, making it the firm’s biggest single debtor.

While the receiver last week noted that the firm in July bounced a $400,000 payment to Par, the lender’s lawyers said B&T had successfully wired “replacement” money and had regularly repaid its principal.

In their letter to the court, the lawyers did not address the past criminal record of B&T’s chief executive, Stephen Odzer, convicted of bank fraud and sentenced to prison in 2005. Odzer did not return calls.

The receiver had also put a spotlight on the second-biggest debtor, Reading-based National Brokers of America, a health-insurance firm, whose affiliate has filed for bankruptcy protection. It owes Par Funding $35 million.

However, Par Funding lawyers said that National Brokers has “rarely missed a payment and had repaid all principal” and only owes “fees."

As for the $25.5 million owed by the third-largest debtor, Colorado Homes and its affiliate, marijuana grower Colorado Farms, the lawyers noted this debt was “secured by significant property and assets,” including “a large and valuable land development” near Aspen. That development could be sold to raise cash for investors, the Par lawyers said.

Kingdom Logistics, an oil company with operations in Wyoming, owes $25 million, but “regularly paid Par Funding hundreds of thousands of dollars a week. The defense is not aware of a missed payment,” the Par lawyers said. Again, they said, investors could seize Kingdom property.

Big Red Express, a trucking company, has “significant security and collateral” on its $19 million debt, including “a farm in New Jersey worth millions,” the lawyers said.

Big Red was co-owned by Richard Welkowitz, a Lancaster County developer who committed suicide last year. His widow, in a recent court filing citing the SEC lawsuit against Par Funding, has asked a Lancaster County court to cancel the debt to Par.

The lawyers also gave an upbeat account of debtor Health Acquisition Co., despite the Florida firm’s filing for bankruptcy liquidation and the federal indictment of its principal, Jorge Perez. He was charged in June with using rural hospitals to defraud insurers.

Health Acquisition owes Par Funding $6 million. Par’s lawyers said the loan was backed by collateral, including a Florida property upon which Par has already foreclosed. Moreover, they said, Health Acquisition had agreed with Par to settle its debt.

“The financials of this company are strong, and the agreement was well-underwritten,” the lawyers said.

The lawyers said Par has also reached a deal with another major debtor, Dual Diagnosis, a California clinic operator that the receiver said owes Par $8.9 million. The Par lawyers called the settlement "likely to recoup Par Funding’s investor monies.”