In 2007, more than a year before the real estate market was rocked by the recession, an island developer corporation set to work building a Palm Beach mansion. Now, five years later, the 27,000 square foot home on 2.5 acres of lakefront property sits vacant. The limited liability company, which is controlled by the developer corporation, recently filed for Chapter 11 bankruptcy.
With a Chapter 11 bankruptcy, a company is offered certain protections while it figures out a way to reorganize and pay off debts. The hope is this will give the company a chance to not only pay off any creditors, but also reorganize in a way to maximize financial success in to the future.
In the case of this Florida mansion, which was built without a specific buyer in mind, the entity that owns the home has $41 million in debt and $74 million in assets.
When looking at some of those debts, one bank provided $15.6 million worth of financing and loans in 2007. The following year, the same lender provided an additional $7.98 million. Some of this has since been paid back, but there is also still some that is owed.
Since the start of construction, second and third mortgages were also taken out on the home. One company provided $5.3 million in 2011, and just this past December, another $1 million. For those two loans extensions have been granted.
This is the first time the developer has had to file for bankruptcy. However, like many since the recession and subsequent real estate market crash, filing for bankruptcy protection just seemed like the most viable option.
Source: Palm Beach Daily News, “Swanson entity files Chapter 11 over pricey ‘spec’ house,” Darrell Hofheinz, Sept. 25, 2012
- While many companies and individuals have filed for bankruptcy in recent years, the process in itself can still be rather complicated. This is where an Orlando bankruptcy attorney can step in to help with answering questions and the actual filing.