Most of the owners of the 30-story Regions Center in downtown Little Rock filed for Chapter 11 bankruptcy protection on Dec. 9, about a month before a hearing to decide whether to appoint a receiver for the property.
In the initial filings in U.S. Bankruptcy Court in Delaware, the owners, in 24 separate bankruptcy filings, listed estimated debts of between $10 million and $50 million. A more detailed filing is expected later. The owners’ assets also are estimated between $10 million and $50 million.
The bankruptcy filing automatically puts a hold on all legal proceedings against the property owners, including the foreclosure lawsuit filed against them in Pulaski County Circuit Court on Nov. 9.
An attorney for Regions Center's owners, Mark Rubin of Florida, told Arkansas Business Friday afternoon that the owners expect to be out of bankruptcy in the first or second quarter of 2017.
"We have a plan to reorganize the property and payoff the loan and to finance it with a new lender," he said.
Wells Fargo Bank filed the lawsuit, alleging that the 32 LLCs with an ownership interest in the building defaulted on a $32 million loan used to buy the property in 2006. As of Nov. 7, according to the bank, the defendants owed $29.6 million.
Wells Fargo also asked for an emergency hearing to appoint a receiver. That hearing was scheduled for Jan. 12 in front of Pulaski County Circuit Judge Chris Piazza, but is now stayed.
"The lender was being a little heavy handed with the way that they were preceding," Rubin said. "We felt that the most appropriate action would be to go to bankruptcy court where they have to have a referee in the room with them to make them do the things that they should do according to the contracts that we have with them."
In bankruptcy filings, the owners listed its 20 largest unsecured creditors: Moses Tucker Real Estate Inc. of Little Rock, owed $145,000; Colliers International Valuation & Advisory Services LLC of Little Rock, owed $145,000; and Entergy Corp. of Baton Rouge, Louisiana, owed $60,000.
"This isn't an issue of about not having money. This is an issue of a dispute with a lender," Rubin said. "So we just have to figure out in this process how we move this lender out and bring somebody that's going to be more commercially reasonable."
Earlier this year, the 547,000-SF Regions Center was listed for sale with a $40 million asking price.