Just as it appeared close to finding a buyer to restructure most of its $1.6 billion in debt, the massive Brooklyn development firm All Year Holdings has filed for Chapter 11 bankruptcy.
The filing in Manhattan federal court Tuesday came a day after the company discovered a $37.8 million confession of judgment was entered by Yoel Goldman, its troubled founder and sole owner, without the approval of All Year’s board. The board could also not reach an agreement with Goldman over his ability to make decisions for the firm, which the filing said could lead to insolvency.
The company has $1.17 billion in assets, according to the filing, including 69 commercial units and 1,648 residential units. It has about $1.6 billion in outstanding debt, consisting of $800 million in bonds issued in Israel and about $760 million in property-level mortgage debt.
All Year was close to finalizing a deal to restructure most of its bonds with Israeli investors. Josh Gotlib’s Black Spruce Management made a bid this summer to assume the debt and take control of 125 All Year properties, but that deal fell through and a joint venture led by Andrew Farkas now appears to be the front-runner.
The properties did not include All Year’s 900-unit Denizen apartment complex in Bushwick or the William Vale hotel in Williamsburg. All Year agreed to sell the Denizen complex to Atlas Capital for $506 million in September. The William Vale is tied up in a legal battle with Goldman’s former partner, Zelig Weiss.
“To further advance and ultimately effectuate a value-maximizing transaction, All Year initiated a voluntary Chapter 11 proceeding on December 14 with the support of its bondholders,” a spokesperson for All Year said.
The spokesperson said All Year has “ample liquidity to manage its ongoing operational needs and the needs of its subsidiary properties, including paying mortgage and related property expenses in a timely manner.”
The bankruptcy filing revealed some key details about All Year’s portfolio and its agreement with Goldman, who became one of Brooklyn’s largest landlords by tapping into cheap debt on the Israeli bond market.
An affidavit from All Year’s chief restructuring officer revealed that Goldman remains the firm’s sole shareholder.
After the company stopped making interest payments to bondholders in late 2019, Goldman was making deals to pay off debt he had personally guaranteed, according to the affidavit. The company reached an agreement to prevent Goldman from appointing new board members, and a chief restructuring officer and All Year’s board were left to handle the decision making.
That agreement was set to expire next month, at which point bondholders could have initiated “involuntary insolvency proceedings” in Israel because of existing defaults, according to the affidavit. The company also discovered that Goldman had, without approval, issued a $37.8 million confession of judgment to Taz Partners of Spring Valley, New York, on the company’s behalf.
The company’s largest unsecured creditors are its bondholders. It also lists Downtown Capital Partners as an unsecured creditor for a preferred equity guarantee of $56.9 million and a mezzanine loan guarantee of $3.6 million. The company has approximately $4 million in cash on hand to fund its operations, according to the affidavit.