Capmark’s $4B Reorganization Plan Gets the Thumbs Up

Capmark Financial Group, which filed for Chapter 11 bankruptcy protection in 2009, is on the way to recovery with a reorganization plan that will deliver $4 billion in cash, stock and new debt to its creditors.

August 23, 2011
By Barbra Murray, Contributing Editor

Capmark Financial Group Inc., which filed for Chapter 11 bankruptcy protection in 2009, is on the way to recovery. A U.S. Bankruptcy Court judge has agreed to green-light a plan of reorganization that will allow the real estate finance company to emerge from bankruptcy by delivering $4 billion in cash, stock and new debt to its creditors, according to reports by Bloomberg and Dow Jones Newswires.

Capmark announced on Oct. 25, 2009, that the company and certain subsidiaries would seek bankruptcy protection. Prior to the announcement, Capmark had reported assets totaling approximately $20.1 billion and liabilities equaling $21 billion. Company officials explained the dire state of affairs in the 2009 second quarter earnings report. “Throughout 2008 and continuing in 2009, as a result of the adverse conditions in the financial and capital markets and general economic conditions, the Company incurred operating losses due principally to fair value adjustments on its loans held for sale, impairments on its real estate and investment portfolios, and an increase in the provision for loan losses on its portfolio of loans held for investment.”

That was then, this is now. The bankruptcy court gave the company the thumbs up on its reorganization plan during a confirmation hearing on August 19. As noted in court documents, general unsecured creditors are to receive $900 million in cash, nearly $1.3 billion of reorganized Capmark debt securities and reorganized Capmark common stock with an implied valued of just over $1.8 billion.

During the good times, such as the glory days of 2006 and 2007, Capmark facilitated its share of sizeable financing deals. The company originated first-mortgage debt totaling $777 million for a 61-property multifamily portfolio in Maryland and Northern Virginia; provided $202.8 million in floating-rate financing for the construction of the Ho’olei condominium development in Maui; and arranged a $189 million loan package for the refinancing of an eight-property medical office building in Southern California.