George S. May Business Blog

Capmark Financial Group files Chapter 11

After posting a $1.6 billion Q2 loss, commercial real estate lender Capmark Financial Group will be filing Chapter 11 bankruptcy.

CEO Jay Levine referred to the reorganization as “unfortunate but necessary” calling the move a “response to recent unprecedented conditions in financial and commercial real estate markets”. Levine continued that “By constraining the availability of capital, these difficult market conditions had a negative effect on all our core businesses.”

The filing is part of a larger restructuring effort at Capmark and certain subsidiaries — not including Capmark Bank, which is excluded from the filing. Capmark Bank recently received $600m of new equity from Capmark and should continue its business unaffected by the bankruptcy proceedings, according to a statement. Subsidiaries filing in Capmark’s bankruptcy include Capmark Finance, Capmark Capital, Capmark Equity Investments, Mortgage Investments, Net Lease Acquisition, Capmark Affordable Equity Holdings, Capmark REO Holding, Summit Crest Ventures, Capmark Affordable Equity and 33 other low-income housing tax credit entities.

Capmark previously entered an agreement to sell its N. American servicing and mortgage banking business to Berkadia Commercial Mortgage. Under the terms of the agreement, Capmark has 60 days from the date of the Chapter 11 filing to exercise the put option. The company said it intends to pursue court approval to complete the sale, subject to the receipt of any higher offers.

“The Chapter 11 process will give Capmark the opportunity to restructure our balance sheet while continuing to focus on maximizing value for our principal stakeholders,” said chief restructuring officer Mohsin Meghji. “Over the past months, Capmark has engaged in extensive and constructive negotiations with our primary creditor constituencies to reach agreement on a plan of restructuring. We expect to complete this effort over the coming months.”

Capmark and its subsidiaries are said to have over $500m of cash and cash equivalents and enough liquidity to continue operations.

The press release can be found here.

Related posts:

1. Readers Digest is filing Chapter 11 bankruptcy The NY Times reports that Readers Digest will be filing for bankruptcy. As another once-staple in the world of paper publications falls, it seems that...


2. Chicago Cubs file Chapter 11 bankruptcy The Tribune is reporting that the Chicago Cubs will filing Chapter 11 bankruptcy in order to secure the transef of ownership. In short, the Chapter...


3. Freedom Communications set to file Chapter 11 Freedom Communications will likely be filing for Chapter 11 bankruptcy this week. The plan, allegedly, will hand the owners of 31 newspapers to its lenders....


4. Mesa Air files for bankruptcy For those unaware, Mesa Air Group filed for Chapter 11 Tuesday in a New York federal bankruptcy court. Mesa chairman and chief executive officer Jonathan...


5. 2009 on track to see the most Chapter 11 filings over one year If – well, more like when – General Motors Inc. files for bankruptcy protection on June 1st, they will become the 99th public company this...