Last Nov. 24, two days before LandAmerica Financial Group went bankrupt, the company refused to release funds it was holding for retired Army Col. Tracy Ralphs of Suffolk. He was about to close on a land purchase for a new home when he got an e-mail from a LandAmerica executive saying the company no longer was in business. Ralphs had put $81,666 of proceeds from selling land—his life savings—into a LandAmerica account on Oct. 15, just two days before that same LandAmerica official sent an e-mail to the company’s chief lawyer warning that the company was about to run out of money to pay customers like him.

LandAmerica Financial Group’s plan to pay off most of the people who entrusted it with tax-shelter funds is to go after the banks and brokers who sold it an obscure kind of investment. The plan the Henrico County-based insurer filed with the U.S. Bankruptcy Court in Richmond on Wednesday night says most investors who put millions of dollars into its 1031 exchange accounts will be paid after a relative few who arranged special security for their funds.

Creditors of LandAmerica 1031 Exchange Services Inc. are not happy about fees claimed by attorneys in the case and have launched an offensive to reduce the amounts in U.S. Bankruptcy Court in Richmond. Since Monday, more than two dozen former clients and customers of the defunct company have filed objections saying the money requests from attorneys and other professionals are excessive.

A handful of employees still working at LandAmerica Financial Group Inc., a one-time Fortune 1000 company, could get a total of nearly $500,000 in incentive bonuses as the firm winds down operations. Approved yesterday in U.S. Bankruptcy Court in Richmond, the plan identifies 17 “key” employees who would be eligible for extra money if they meet certain goals, such as selling off subsidiaries, closing businesses down, or meeting tax-filing requirements.

LandAmerica Financial Group Inc. and a federal agency that earlier this week moved to take over the bankrupt company’s pension program have agreed to a plan to ensure it is fully funded.

Money placed with LandAmerica 1031 Exchange Services Inc. belongs to the estate and not the customers who entrusted their funds to the now-bankrupt company. U.S. Bankruptcy Court Judge Kevin R. Huennekens ruled yesterday that customers who gave their money to the company to hold temporarily as a way to defer capital-gains taxes have no ownership over the funds.

Customers of LandAmerica 1031 Exchanges Services Inc. probably will become creditors of the bankrupt company, although the judge did not rule definitively yesterday. Attorneys for three customers argued yesterday in U.S. Bankruptcy Court in Richmond that their clients had temporarily parked money with the exchange firm and the money was essentially held in trust and should be separate from the estate.

Tanya Parker spent yesterday morning in a crowded warehouse unloading and sorting canned foods, dried pasta and gourmet candy corn—a far cry from what she did as a corporate events planner at Circuit City. It isn’t a temporary job she’s taken as she waits to return to a corporate suite somewhere. It’s a volunteer gig that takes her mind off her job search and helps others at the same time.

A New Jersey company is offering to buy claims against a bankrupt subsidiary of LandAmerica Financial Group Inc. for pennies on the dollar. Hain Capital Group has been calling and mailing letters to creditors of LandAmerica 1031 Exchange Services Inc., which filed for bankruptcy protection in late November along with its parent company.

A LandAmerica Financial Group Inc. subsidiary wants access to customer funds to pay vendors and expenses while going through Chapter 11 bankruptcy proceedings. LandAmerica 1031 Exchange Services Inc. filed the request in U.S. Bankruptcy Court in Richmond and said if it is not granted, the company may be forced into Chapter 7 liquidation bankruptcy.

After Fidelity National Financial Inc. bought out LandAmerica Financial Group Inc.‘s primary title insurance subsidiaries, the Florida company cut 27 percent of the inherited workforce.

A $330 million class-action lawsuit accuses LandAmerica 1031 Exchange Services and Sun Trust Banks Inc. of defrauding clients by using their money to pay off other clients. The lawsuit, filed Wednesday in U.S. District Court for the Southern District of California by four LandAmerica clients on behalf of about 400 customers, characterizes the companies’ actions as a Ponzi scheme.

A U.S. Bankruptcy Court judge agreed yesterday to hear five test cases of people who can’t get their investments from LandAmerica Financial Group Inc. Hundreds of investors, many of them individuals whose livelihoods rely on the funds, still don’t know if or when they will get their money back from the Henrico County firm that declared bankruptcy in late November. More than $300million could be at stake.

The meltdown in U.S. financial markets began last year. In a Nov. 24, 2007, Op/Ed column, Theodore Chandler—CEO of LandAmerica—discussed the challenges confronting the real-estate sector. He cited specific problems and concerns, and stressed that housing is affected by cycles and local conditions. Chandler saw “clear signs of recovery” and expressed “pragmatic optimism.“

A real estate market under siege from subprime mortgages and the credit crunch could be hit with another twist. The bankruptcy case in Richmond of LandAmerica 1031 Exchange Services Inc. might harm the market for a key tax shelter used by people who buy investment properties. The consequences could reach far beyond central Virginia and the 450 customers of the now-closed exchange, which is a subsidiary of Henrico County-based LandAmerica Financial Group Inc.