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California Real Estate Company Files Chapter 11 Bankruptcy

A real estate finance and development company in Sherman Oaks, California filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the Court of the District of Delaware. The cases of Woodbridge Group of Companies, LLC, who reported $500 million to $1 billion in assets, as well as, liabilities, has been assigned to Bankruptcy Judge Kevin Carey.

Woodbridge Group Bankruptcy

Despite considerable success in developing high-end real estate, Woodbridge Group of Companies has experienced increasing operating and development costs, combined with costs caused by ongoing litigation and regulatory compliance. These costs and regulatory pressure have caused Woodbridge Group of Companies, LLC to be unable to make a note payment that was due earlier in the month. The company owes nearly $750 million to almost 9,000 note holders according to bankruptcy court documents. One of the largest claims by a creditor is Janckila Construction of Carbondale, which claimed that Woodbridge owes it over $500,000.

SEC Investigations

The U.S. Securitas and Exchange Commission launched an investigation of Woodbridge last year for potential fraudulent sales of securities. In addition to the SEC probe being launched, the company reported around 25 inquiries from state regulators about its securities sales. They allege that the Woodbridge offered and sold unregistered securities by unregistered agents.

Chapter 11 Restructuring

Chapter 11 bankruptcies are almost always the most expensive form of bankruptcy and Woodbridge’s case is no different. According to documents submitted to the U.S. Bankruptcy Court, the company is paying $175,000 per month for bankruptcy attorney consulting. Because of the complexity of the case and the over 250 affiliate companies involved in the California bankruptcy, this high fee is most likely justified.

Woodbridge Group of Companies, LLC, announced this week that it would use its bankruptcy proceedings to restructure the debt and has obtained a commitment for $100 million in debtor-in-possession financing from a Los Angeles based capital company. By filing Chapter 11 bankruptcy, the company will be able to continue its normal business operations while it formulates a plan to reorganize company debts.

If you are a business owner struggling with debt, contact our Modesto bankruptcy law office today. Our team of attorneys can answer your questions and guide you to a strategy to resume business with less debt.

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