The interim managers for USA Capital, a private lender controlling $962 million in investor funds, on Tuesday reported plans to ask the bankruptcy judge to approve an initial distribution of $64.7 million to investors.

Bankruptcy Judge Linda Riegle is scheduled to consider the motion, which supplements one filed earlier, at an Aug. 4 hearing.

The payments to investors, if approved, are expected to be mailed in late August or September.

"Not everybody is going to get money at this time," said Mark Olson, chief operating officer of USA Capital.

Some investors were paid more interest than borrowers paid on loans they made, and those investors owe money to USA Capital's other creditors.

However, investors in USA Capital Diversified Trust Deed Fund, an investment registered with Nevada for Nevada residents only, would get an initial distribution although the fund has a financial deficit, according to the motion filed by Lenard Schwartzer.

USA Capital paid out more money to Diversified fund investors than it received from borrowers on the 23 loans held by the fund.

Of the 23 loans, 20 are nonperforming, meaning that payments are past due, Olson said.

"Essentially, you have a situation where the investors in the (Diversified) fund owe us money," Olson said, referring to the bankruptcy estate of USA Capital.

Tom Allison, chief restructuring officer, however, has obtained collateral for the $55 million 1090 loan, one key asset of Diversified fund.

The 1090 loan was used as a pass-through from USA Capital to a company controlled by Tom Hantges and Joe Milanowski, USA Investment Partners, Olson said.

Allison may be able to convert some of Diversified fund's assets into cash, Olson said.

The majority of investor committees support the distribution "in part or in whole," Olson said.

USA Capital solicited money from individual investors to make short-term loans secured by real estate prior to filing for bankruptcy court protection in April.