The Woodbridge Group— Filing for Chapter 11 Bankruptcy
Luxury Real Estate Developer Woodbridge Group of Companies Files for Bankruptcy during the Middle of an SEC Investigation; Woodbridge Has Allegedly Cited Expansion Costs, Litigation, and a Government Fraud Investigation
Luxury real estate developer Woodbridge Group of Companies filed for Chapter 11 bankruptcy on Monday, citing costs of expansion, litigation and a government fraud investigation, according to Reports from a U.S. Bankruptcy Court in Wilmington, Delaware under review by securities attorneys Jason Kane and James Booker.
Peiffer Wolf Carr & Kane securities practice lawyers are investigating sales practices of investment professionals who recommended and sold Woodbridge to investors and the circumstances surrounding Woodbridge Group’s Chapter 11 bankruptcy.
Woodbridge Mortgage Investment Fund investors who believe they may have lost money are encouraged to contact attorneys Jason Kane or James Booker with any useful information or for a free, no obligation discussion about their options.
The U.S. Securities and Exchange Commission has been investigating Sherman Oaks, California-based Woodbridge, which calls itself a leading developer of high-end real estate, since 2016 for possible fraudulent sales of securities, according to court documents.
Furthermore, Robert Shapiro, who resigned as Woodbridge‘s chief executive officer on Friday, gained attention last year when he bought the Owlwood Estate in Los Angeles, the storied former home of stars such as Tony Curtis and Cher, for $90 million.
In August, the SEC also purportedly sent subpoenas to 235 LLCs which the Commission believes are owned or operated by Woodbridge’s former president, Robert Shapiro, did not receive a proper response, according to an SEC filing from October.
What is more, Woodbridge said that the entity also had received inquiries from about 25 state regulators about its securities sales and the alleged offer and sale of unregistered securities by unregistered agents, according to reports from California.
Documents filed in the U.S. Bankruptcy Court in Delaware allege that Woodbridge
owes about $750 million to an estimated 8,998 note-holders, and that Woodbridge allegedly operates through a complex network of more than 250 affiliated companies owned by RS Protection Trust, of which Shapiro is the trustee and his family members the sole beneficiaries.
Investment News has also reported that six elderly clients, on a spectrum from their seventies to their nineties, collectively had allegedly invested millions of dollars into Woodbridge investment programs.
The report goes on to report that Woodbridge raised $1 billion but the company’s court filings claimed that it had assets of $650 million to $750 million in debt, according to the Investment News report.
Said elderly investors questioned where the difference of $350 million was to be found, according to the aforementioned Investment News report.
Woodbridge Has Allegedly Stopped Paying Its Monthly Dividends
Woodbridge has allegedly stopped paying their monthly dividends, a huge financial red flag, according to the aforementioned reports presently being reviewed by attorneys Jason Kane and James Booker.
Woodbridge released the following statement:
“Historically a leading developer of high-end real estate, as the size and scope of the business has grown, increased operating and development costs have been exacerbated by the unforeseen costs associated with ongoing litigation and regulatory compliance… This combination of rising costs and regulatory pressure led to a loss of liquidity, resulting in Woodbridge’s inability to make its regularly scheduled one-year notes payment due Dec. 1, 2017.”
Furthermore, Woodbridge also allegedly said it had settled three of the state inquiries and was in serious talks with authorities in Arizona, Colorado, Idaho and Michigan when it filed for Chapter 11 protection, the reports state.
What is more, the company said it planned to use the bankruptcy proceedings to restructure $750 million in debt and had already obtained a commitment for up to $100 million in debtor-in-possession financing from Los Angeles-based Hankey Capital, the reports state. The financing was secured by a first priority lien on 28 properties, and Hankey is also willing to consider providing bankruptcy exit financing, the reports note.
In the meantime, Woodbridge is hoping to turn the ship around. Purported turnaround specialist Lawrence Perkins of SierraConstellation Partners has allegedly taken the helm as chief restructuring officer, but Shapiro will carry on to receive a $175,000 monthly consulting fee during the Chapter 11 proceedings, according to the aforementioned reports.
No allegations of misconduct are being made against Woodbridge in this blog.
Woodbridge Securities Sales Practices Investigated by Securities Lawyers
The Peiffer Wolf Carr & Kane securities lawyers often represent investors who lose money as a result of investment-related fraud or misconduct and are currently investigating sales practices involving the Woodbridge Mortgage Investment Fund securities. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.
Woodbridge investors who believe they lost money as a result of their investments in Woodbridge may contact the securities lawyers at Peiffer Wolf Carr & Kane, Jason Kane or James Booker, for a free no-obligation evaluation of their recovery options, at (585) 310-5140 or via e-mail at email@example.com or firstname.lastname@example.org.