Bankruptcy DIP Loan in Fort Myers, Florida

Saturday, May 25, 2019
Borrower   A real estate development partnership in Fort Myers, Florida. The partnership was in Chapter 11 bankruptcy.
Loan   A three year $11 million loan at 12%, together with a subordinate $5.3 million on the same terms.
Collateral   a Super-priority Lien on 209 acres of developed land southeast of the Ft. Myers central business district. The collateral has approvals for office, light industrial, residential and commercial sites and is fully concurrent. In addition, we received a lien on a small out-parcel and $2 million of impact fee credits.
Guarantors   The developer's principals - also in personal bankruptcy.
Purpose   The loan enabled the estate to pay off the City of Fort Myers, which was in the process of foreclosing on the property after a long drawn-out and bitter legal battle.
Exit strategy   The borrower planned to use the time gained by the loan to solicit bids for the property and to sell it for enough to pay all its liabilities.
Outcome   The borrower was unable (or unwilling) to sell the property. As the renewal date approached it became clear that the estate would not have the cash to service the loan. The chapter 11 proceeding was converted to a Chapter 7 liquidation, and the principals filed personally for bankruptcy. Foreclosure has been completed and the property has been sold.
The proceeds did not cover principal and interest on the loan (together with the additional funds we had to advance to keep the project afloat.) We are in litigation with our subordinate lenders who stand to lose their entire advance.
Opportunity   We have Impact Fee Credits for sale at attractive prices - all rights reserved

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