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SunCal bankruptcies, part deux

Submitted by on 1, November 24, 2008 – 11:00 amNo Comment

So I’ve got a little bit more for you on those SunCal bankruptcies … looks like there are 27 cases total as of last Wednesday, when SunCal Oak Knoll LLC – the entity that was set up to develop the Oak Knoll project in Oakland – filed an involuntary bankruptcy petition in federal bankruptcy court in Santa Ana.

Those cases include four filed by creditors; 14 voluntary cases filed by SunCal management on November 6 and 7; and another nine involuntary cases filed November 12, 14 and 19 (including the Oak Knoll case). The final nine cases were filed as involuntary cases because Lehman-related entities are equity holders in these projects, and they refused to consent to the bankruptcy petitions, according to a legal filing seeking the court’s consolidation of several of the cases.

The Oak Knoll filing shows more than $4.6 million in unpaid obligations on the fledgling 167-acre development, including unspecified “fees” owed to SunCal Management LLC of more than $450,000. According to SunCal’s David Soyka, Lehman was the sole source of funding for the project.

Meanwhile, Soyka said in a statement, work on the site for the demolition of a number of old buildings was suspended when Lehman cut the funding for the project, and also:

There is a lack of enough on-site security and there has been an increasing problem with vandals, copper thieves and displaced people cutting the perimeter fences to enter the empty buildings. This project is in an area of Oakland Hills that has a high risk of wildfires. The vacant buildings pose a potential fire hazard as they are being used as dwellings for shelter.

But it’s not all bad: They say they’ve got “an alternate funding source of up to $75 million to cover critical expenses at projects such as Oak Knoll.” And who’s providing that funding? According to a Reuters story I found in the Guardian (UK) newspaper of all places, it’s D.E. Shaw.

As in, the folks who are funding development out at Alameda Point and a host of other projects (and who are, for the time being at least, decidedly not bankrupt).

Per the story, which details the latest in the Lehman bankruptcy court saga in Manhattan:

(Judge James) Peck also denied a request from bankrupt California developer SunCal Cos to use cash collateral owned by Lehman to obtain bankruptcy financing. Lehman loaned the company about $2.3 billion prior to SunCal’s bankruptcy and the developer said it needs to access those funds to move ahead with a $75 million loan from D.E. Shaw Group & Co. Because Lehman is also bankrupt, SunCal said it was in a unique situation where it could not get access to the cash as it would be able to if it had a non-bankrupt lender.

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