The Michael R. Mastro bankruptcy trustee has asked a judge to approve payment of $2.8 million in recovered funds to the fugitive real-estate magnate's many creditors.

If there are no hitches, trustee James Rigby said Monday, the checks could be mailed by mid-February.

The distribution would be the first since Mastro, 86, was pushed into bankruptcy 2 1/2 years ago. But each creditor would get only slightly more than 1 percent of the sum each invested with the longtime Seattle real-estate developer and lender.

And Rigby said they're unlikely to get more than an additional 1 or 2 percent, at best. "I don't see the money right now," he said.

Approved and pending unsecured claims total more than $270 million.

Three of Mastro's bank lenders filed an involuntary bankruptcy petition against him in July 2009 after the collapsing economy undercut his highly leveraged real-estate empire, leaving him unable to pay his debts.

Mastro and his wife, Linda, disappeared last summer after failing to comply with court orders to turn over diamond rings valued at $1.4 million. Warrants have been issued for their arrest, but they remain at large.

Of the $2.8 million to be distributed, about $2 million would go to holders of 282 approved claims. An additional $800,000 would be set aside for 41 claims whose validity hasn't yet been determined.

If those claims are denied, Rigby said, the money will be redistributed among the approved claimants.

Most of Mastro's creditors are individuals — including about 200 "Friends & Family" investors who loaned him a total of about $100 million in return for pledges of above-market interest payments.

But the biggest distribution checks would go to banks that lost money on real-estate loans to Mastro.

Frontier Bank — taken over by Union Bank of San Francisco after it failed in 2010 — would get $204,000 back on its $20 million claim, according to a court filing Friday.

Pacific Continental Bank of Eugene, Ore., whose approved claims total nearly $13.4 million, would get about $135,000.

Rigby filed paperwork for the payments after U.S. Bankruptcy Judge Marc Barreca last month rejected a bid by Hendrik Dorssers, a Mastro associate from Monaco, to hold $3.2 million in reserve.

Dorssers wanted the money held while he appeals an earlier Barreca ruling denying him any of the proceeds from the 2010 sale of Mastro's Medina waterfront mansion. Had Dorssers prevailed, the distribution to creditors likely would have been delayed, Rigby said.

The trustee said in a court filing that he now holds about $4.5 million recovered from Mastro's assets, but needs to retain "significant funds" for expenses, including legal fees, that he will incur in pursuit of more money for creditors.

For instance, he said, life insurance policies on Mastro worth $3.25 million cost $212,000 a year in premiums.

Rigby and his team of lawyers, accountants and consultants has been paid a total of about $6.8 million so far from recovered funds.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com