Attorney Craig Rankin of Levene, Neale, Bender, Rankin & Brill L.L.P., who is representing the principals of developer West Millennium Group, is warning that the Brockman building will file for Chapter 7 bankruptcy on Monday if the lender—in this case, Countrywide--- doesn’t negotiate the loan. “Their only objective is to foreclose," he told us yesterday, expressing his frustration with the situation. "We will file for Chapter 7 on Monday if the banks don’t work with us." The fact that the Brockman, an adaptive re-use project at 7th and Grand, is close to bankruptcy isn’t surprising: The building turned rental in December and then went completely dark soon after. A week and half ago, the Wall Street Journal dropped the news that the principals of West Millennium (Norman Salter and Dilip Ram) are going through bankruptcy proceedings, and last Friday, the Downtown News reported that Countrywide had initiated foreclosure proceedings. If there's a bigger story here, it's what’s going on with West Millennium. Since January, West Millennium principals have filed Chapter 7 bankruptcy on 19 either planned or completed projects, developments ranging from that abandoned Eagle Rock mixed-use project at 3901 Eagle Rock Blvd to Acama Villas, a Studio City condo development that held an auction last August. Additionally, at least 10 more affiliated entities are expected to file Chapter 7, according to papers filed this past Tuesday.
---Who they are: According to their now defunct web site, West Millennium Group has developed more than 20 projects around Los Angeles. They have offices on Sawtelle Blvd. Salter Construction, founded by Norman Salter, is part of West Millennium.
--- According to filings in U.S. Bankruptcy Court, Central District Of California, both principals of West Millennium have filed for Chapter 11. The reason they’re filing for bankruptcy protection is because they personally guaranteed the loans that funded their projects. Both their bankruptcy filing numbers are referenced: Ram filed in January (1:09-bk-10969-KT ) and Salter filed in February (1:09-bk-11653-KT)
--Additionally, 19 of their projects are now in Chapter 7. These projects are referred to as "SPEs" in the most recent filings (short for special purpose entities “SPEs”) Here’s the list so far, a screen shot from a filing (from another attorney) this past week. (Presumably because each development gets a loan, it's considered its own entity.) Some of these projects are recognizable. For instance, Eagle Rock Partners is 3901 Eagle Rock Blvd, that mixed-use project that was discussed back on the site last fall. Other projects listed are finished. For instance, why is Bridgeway Mills, a sold-out Playa Vista development on the list? Attorney Rankin writes in an email: "We are filing Chapter 7s for all the ownership entities as well as most "dead" entities just to put all entities that are no longer viable to bed."
---So is this just how things shake out, ie, is it normal to see so many different projects filing Chapter 7? We asked that question of Robert P. Goe, a Newport Beach-based lawyer who specializes in bankruptcy filings. “It is somewhat unusual for the projects to file Chapter 7 as they do not receive a discharge in bankruptcy,” he writes in an email. “There may be a lot of trade creditors in addition to the banks who are unpaid so Ch 7 may just be a way of bringing closure to the matters.”
---Meanwhile, according to that filing on Tuesday, at least 10 more entities are expected to file for Chapter 7 protection. The same filing also gives some history of West Millennium and what the strategy is for the two principals going forward. You can download the PDF of the filing here.
---So what happens now to the SPEs ? “If no equity, the bank will foreclose and take back [the property] in next 120 days or so,” writes Goe in an email. Meanwhile, we'll be watching to see what happens to all these properties going forward. And since the Brockman is our favorite downtown building, we will be watching to see what happens to her.
· CurbedWire: West Millennium Exploring All Options, Santa Monica Homeless Count [Curbed LA]
· Market Blues: Downtown's Brockman Goes Rental [Curbed LA]