Daily News: July 9, 2012

Carl Marks Advises PJ Finance’s Unsecured Creditors Committee

PJ Finance Company, owner of 32 apartment complexes with nearly 10,000 units located in major metropolitan areas throughout the Sunbelt region, has successfully completed a Chapter 11 plan of reorganization. The investment banking group of Carl Marks Advisory Group served as financial advisor to the Official Committee of Unsecured Creditors (UCC).

PJ Finance sought protection under Chapter 11 due to pressures from declining occupancy and cash flow. At the time of the filing, more than 1,700 units were offline and occupancy rates at near historic lows. Through the Chapter 11 process, the debtors worked in conjunction with the UCC and Torchlight Loan Services LLC, the special servicer of $475 million senior mortgage notes, to rehabilitate the properties and right size their capital structure. An auction with financing support was formulated to maximize value and select a sponsor for a consensual plan of reorganization.

Following a highly competitive and extensive auction, the existing equity owners of the properties, in conjunction with affiliates of Starwood Capital, became the sponsors of the plan of reorganization under which $22.5 million in new capital was invested along with the assumption of mortgage notes. Notably, the plan also makes payment to all general unsecured creditors in full.

“The Chapter 11 process and the cooperation of all the stakeholders yielded substantial value recovery, a testament to the possibilities available to creditors in a dynamic bankruptcy process,” said Christopher K. Wu, partner, Carl Marks Advisory Group.

“Carl Marks showed us outstanding creativity, a strong voice of advocacy and persistence in achieving this remarkable result,” said Alberto Carrizal, chairman of the Unsecured Creditors Committee.

The Carl Marks team was led by Christopher Wu and Scott Webb. Mark Power and Joseph Orbach of Hahn & Hessen served as counsel to the UCC.

Carl Marks Advisory Group provides a wide array of investment banking and financial, operational, real estate and healthcare advisory services to the middle market, including mergers and acquisitions advice, sourcing of capital, financial restructuring plans, strategic business assessments, improvement plans and interim management.