DALLAS — A division of Henry S. Miller Co. has agreed to enter bankruptcy proceedings. Henry S. Miller Commercial LLC (HSMC) has filed an Order for Relief with the U.S. Bankruptcy Court for the Northern District of Texas, which will allow it to change the involuntary Chapter 7 bankruptcy filing undertaken by three of its creditors to a voluntary Chapter 11 filing. The filing is the result of a botched real estate deal earlier this year that resulted in a flurry of lawsuits.
Three entities controlled by real estate investor Barry Nussbaum — Dallas Clubview Gardens LP, Woodside Apartments LP and BNC Lake Jackson Village LP — had entered into an agreement to sell various multifamily properties to a client of HSMC named Jim Flaven. It was later revealed that Flaven was a fraudulent buyer, according to a statement from Henry S. Miller, and he disappeared before the deal could be completed.
Nussbaum blamed HSMC for not properly vetting its client and, subsequently, filed a civil suit against it to collect damages for the failed deal. HSMC lost the civil suit but claimed this happened as a result of misrepresentation by its counsel. HSMC then filed a malpractice and negligence suit against its attorney and is appealing the original court decision.
The Nussbaum entities attempted to collect on the settlement by filing an order for Chapter 7 liquidation against HSMC. By requesting a change to Chapter 11, HSMC is attempting to develop its own plan to pay off the creditors, rather than have the courts liquidate its assets. HSMC currently has no employees and no operations, its assets having been shifted to another Henry Miller affiliate in a move that may end up being challenged in court by its creditors.
The creditors have gone on record with local publications stating their intentions to keep the bankruptcy as a Chapter 7. The decision on the order of relief will be up to a federal judge to decide.
The filing does not affect Henry Miller's Dallas-based brokerage arm, Henry S. Miller Brokerage LLC.
— Coleman Wood