Business Capital Secures $2.3MM Real Estate Loan for Chapter 11 Bankruptcy Estate
“What I love most about my industry, is the variety of clients, challenges and deal types we manage: it’s always new and interesting, yet we learn something new with each case. Whenever we can achieve a successful outcome that nobody thought possible and assist a referring colleague in the process, it’s a great day!”– Chuck Dole, Managing Director, Business Capital
Our client was the Trustee of a non-profit corporation which owned an abandoned land fill and leased an adjacent clean parcel of mixed-use real estate in Northern California. The land fill was operated for 40 years accepting municipal solid, inert and nonhazardous materials. The non-profit corporation acquired ownership of the landfill from the State of California and was forced to shut down 10 years later due to non-compliance of regulatory measures. The owner had previously obtained approval to split the 25-acre property into two parcels, thereby increasing potential saleability and value. A portion of the property is leased to a nursery, which operates five retail locations; the other larger portion still houses a landfill. The subject property is located near prominent shopping centers with easy access to a major interstate and assumed to have a higher intrinsic value to a commercial real estate developer.
The Trustee, after taking over control of the assets in the Ch. 11 Bankruptcy case, was seeking a loan to fund an engineering study required to ascertain the cost of remediating the landfill and accomplish the sale of both parcels “as-is” at public auction, either to an individual or separate buyers. Obtaining financing for the study, auction and administrative costs was a challenge based on the current market value of the subject property and the amount of secured creditors that had an interest in the real property.
Business Capital has a reputation for making the seemingly impossible, possible and was referred in by the Trustee of the Bankruptcy Estate. This case was complex, challenging and required a resourceful financing solution. Business Capital was able to leverage the real estate upside and underwrite a transaction that would pay off the secured creditors in full while also providing the necessary capital to obtain the engineering study and provide the lender with an option to purchase the property, assuming the engineering study resulted favorably in enhancing the market value of the property.