HORSHAM, PA. — Horsham-based Capmark Financial Group has filed for Chapter 11 bankruptcy protection. The company has also filed the customary motions that will allow it to continue normal day-to-day operations. According to the filing, as of October 23, Capmark and its filing subsidiaries had more than $500 million in cash and cash equivalents available to fund its operations.
Several Capmark subsidiaries are subject to the filing, including Capmark Finance Inc.; Capmark Capital Inc.; Capmark Equity Investments, Inc.; Mortgage Investments, LLC; Net Lease Acquisition LLC; SJM Cap, LLC; Capmark Affordable Equity Holdings Inc.; Capmark REO Holdings LLC; Summit Crest Ventures, LLC; Capmark Affordable Equity Inc.; and 33 of the company's Low Income Housing Tax Credit entities.
Subsidiaries that have not filed for Chapter 11 protection include Capmark Investments LP, Capmark Securities, Inc., and Capmark Bank, which recently received $600 million in new equity from Capmark.
In a statement, Jay Levine, president and CEO of Capmark, said, “We view this reorganization process as an unfortunate but necessary response to recent unprecedented conditions in financial and commercial real estate markets, which presented a significant challenge for Capmark and similarly situated finance companies. By constraining the availability of capital, these difficult market conditions had a negative effect on all our core businesses.”
In the same statement, Mohsin Meghji, chief restructuring officer for Capmark, said that the Chapter 11 process will give the company the chance to restructure its balance sheet while continuing operations. He further states that the company has been negotiating with its creditors on a restructuring plan and expects to complete this in the coming months.
The company was involved in several deals prior to the filing that it hopes to still complete. In September, Capmark and some of its subsidiaries entered into an Asset Put Agreement with Berkadia Commercial Mortgage LLC in which Capmark has the right to sell its North American servicing and mortgage banking businesses to Berkadia. Capmark also entered into an agreement this month in which it has agreed to sell its military housing business to a third party, and in a separate transaction, it also agreed to sell all of its outstanding shares of Premier Asset Management Company to its Japanese loan servicing business.
—Coleman Wood