October 26, 2009
By MICHAEL J. de la MERCED, New York Times
The Capmark Financial Group, the big commercial real estate finance company cobbled together from pieces of GMAC, filed for bankruptcy on Sunday after struggling with a heavy burden of failing loans and debt stemming from its leveraged buyout three years ago.
Capmark is only the latest to fall victim to continued trouble in the commercial real estate market, which many analysts have said will continue to deteriorate. Many small banks have collapsed this year under the weight of commercial loans.
The company had warned last month that it might seek Chapter 11 protection after reporting a $1.62 billion quarterly loss.
Last month, the company agreed to sell its mortgage loan and servicing business to Berkshire Hathaway and Leucadia National for as much as $490 million. That agreement carried a 60-day expiration date, or around Nov. 2 — unless Capmark filed for bankruptcy, which would give it 60 more days to complete the sale.
Kohlberg Kravis Roberts, Goldman Sachs Capital Partners, Five Mile Capital and Dune Capital bought GMAC’s commercial real estate businesses in 2006 for about $1.5 billion in cash, with GMAC retaining a 21 percent stake in the operation. K.K.R. has already written down the value of its Capmark investment to zero.
In a court filing on Sunday, Capmark said that it had about $20.1 billion in assets and $21 billion in liabilities as of June 30. About $10 billion of Capmark’s assets reside in a Utah bank the company owns, which will not be subject to a bankruptcy filing.
In a Chapter 11 proceeding, the Berkshire-Leucadia sale would be structured as a 363 sale, named after a section of the federal bankruptcy code. A Berkshire-Leucadia venture would be deemed the stalking horse bidder, which allows other companies to potentially top that offer.