Market Overview

Breakwater Equity Partners Reorganizes Five Properties through Chapter 11 Bankruptcy


Rescues Multifamily, Office, and TIC Portfolio

San Diego, CA (PRWEB) November 09, 2012

Breakwater Equity Partners, a commercial loan workout firm, has successfully restructured five properties in Northern California through individual Chapter 11 bankruptcies. A total of seven bankruptcies were filed on behalf of the owners. Six of the properties are multi-family, one of the properties is office, and one of the properties is owned by tenants in common.

When the real estate market crashed in 2008, the owners were unable to make loan payments after occupancies fell and rents declined. As a short-term fix, the owners decided to borrower more money from hard money lenders at high interest rates. This strategy was not successful when the recession lasted longer than anticipated and the hard money loans came due. Facing foreclosure, the owners called in Breakwater to restructure the loans.

Breakwater performed an in-depth analysis on each of the buildings, reviewing lender liability claims, bankruptcy potential, structural issues, submarket conditions, and financial projections. Working with the owners, Breakwater then developed a master strategic plan to rescue as many properties as possible. Two of the properties were sold, and seven properties went into bankruptcy.

After a lengthy series of disputes with the lenders, the borrowers were able to reorganize five of the seven properties. Chase Bank, Fannie Mae, and a handful of local banks approved over $30MM in debt restructuring. The portfolio is now out of danger and performing well due to reduced loan payments and improved market conditions.

“Bankruptcy can be a scary word to many investors,” said Phil Jemmett, Breakwater Equity Partners CEO. “However, with the right team and the right strategy, Chapter 11 bankruptcies can protect distressed assets and give owners time to restructure debt. Bankruptcy is a powerful tool, if handled correctly. In this case, we could not have saved these buildings without using bankruptcy to stop the foreclosure process.”

About Breakwater Equity Partners
Breakwater Equity Partners is a San Diego-based commercial real estate workout consultancy and investment firm. Through Breakwater's extensive experience on over 200 engagements with loan values in excess of a $2.5B, the firm has devised a unique, multidisciplinary approach to uncovering and resolving distressed assets. Breakwater's professional team combines legal, financial, economic, banking, tax, and regulatory expertise to devise customized strategies for each property regardless of market (primary to tertiary), asset class (office, retail, multi-family, industrial, flex, land) or loan type (portfolio or CMBS). Please visit our website at to review case studies on representative deals or call 858.490.3630.

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