Lender Capmark Financial Group Files for Bankruptcy

Lender Capmark Financial Group Files for Bankruptcy

Oct. 25 (Bloomberg) -- Capmark Financial Group Inc., the lender owned by firms including Goldman Sachs Group Inc. and KKR & Co., filed for bankruptcy protection after posting a second- quarter loss of about $1.6 billion.

The company listed consolidated debt of $21 billion and consolidated assets of $20.1 billion as of June 30 in Chapter 11 documents filed today in U.S. Bankruptcy Court in Wilmington, Delaware. Forty-three affiliates also sought protection.

Capmark is one of the largest U.S. commercial real estate finance companies, with more than $10 billion in originations, according to Moody’s Investors Service. The company, formerly known as GMAC Commercial Holding Corp., services more than $360 billion of debt.

The Horsham, Pennsylvania-based company has struggled as the default rate on commercial mortgages held by U.S. banks more than doubled to the highest since 1994. Capmark said on Sept. 2 that it may reorganize under Chapter 11 of the bankruptcy code.

A called placed to Joyce Patterson, a spokeswoman for Capmark in Philadelphia, was answered by a prerecorded message saying that the phone had been disconnected.

$7.1 Billion

According to today’s court documents, $7.1 billion is owed by the company and its units to the 30 largest creditors without collateral backing their claims.

The three biggest are Citibank N.A., as administrative agent under the $5.5 billion credit agreement, with a claim of $4.6 billion; Deutsche Bank Trust Company Americas, as trustee for the 5.875 percent senior notes and the floating senior notes due 2010, with claims of $1.2 billion and $637.5 million, respectively; and Wilmington Trust FSB, as successor trustee for the 6.3 percent senior notes due 2017, with a claim of $500 million, according to court papers.

On Sept. 2, Capmark also said it struck a deal with Warren Buffett’s Berkshire Hathaway Inc. and Leucadia National Corp. to sell its loan servicing and mortgage business to the companies for as much as $490 million.

The company had its senior unsecured ratings lowered to C from Caa1 by Moody’s Investors Service Inc. after the announcement of the potential sale, its release of the operating results and its restructuring efforts, according to a Sept. 9 credit opinion issued by Moody’s.

“Unsecured lenders and bondholders, either in a default or restructuring scenario, would experience substantial losses,” Moody’s said in the opinion. The C rating reflects the potential loss severity, according to the report.

KKR, the New York-based private-equity firm run by Henry Kravis and George Roberts, wrote their investment in Capmark down to zero as of March 31 of this year, according to data provided by its publicly traded investment vehicle.

The case is: In re Capmark Financial Group Inc., 09-13684, U.S. Bankruptcy Court, District of Delaware (Wilmington).

bloomberg