Capmark Financial Group, former GMAC Commercial Real Estate, Files Bankruptcy
Posted on | October 26, 2009 | 1 Comment
Capmark Financial Group, the former GMAC commercial real estate subsidiary, filed for bankruptcy protection on Sunday, October 25th. The bankruptcy completely wipes out the investments of several private equity firms. The move to file bankruptcy was done because of the troubled conditions of the current commercial real estate market. Capmark Financial Group was created in March 2006 through a leveraged buyout of GMAC.
Capmark had previously been working with its creditors to negotiate the terms of the bankruptcy but no agreements were reached prior to the bankruptcy protection filing Sunday. Some of these creditors include Citigroup and JP Morgan Chase. As of June 30, 2009, Capmark had $20.1 billion in assets with $21 billion in liabilities. This seems to be the trend when it comes to commercial real estate companies over the last few years; more liabilities than assets.
At the time of bankruptcy, private equity firms KKR, Goldman Sachs Capital Partners and Five Mile Capital owned 75.4% of the company while GMAC owned 21.3%. Employees and directors owned the remainder of the company. Unfortunately, equity investors are going to be left with nothing after Capmark filed bankruptcy. The Utah-based bank, Capmark Bank, was not part of the bankruptcy filing.
The commercial real estate business continues to worsen as many CRE businesses are struggling to make ends meet. It is not going to be surprising if we see many more cases like this in which CRE companies file for bankruptcy protection because of tough economic conditions and a lack of available capital.
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Author: Tiffany Mann
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October 26th, 2009 @ 8:54 am
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