Trigild’s Liquidation Plan for SCI’s $1.6B Investment Portfolio
- Jul 12, 2012
San Diego—William J. Hoffman, CEO of San Diego-based Trigild Inc., has been appointed liquidating trustee over the bankruptcy of Secured California Investments Inc. (SCI) and SCI Real Estate Investments LLC, both Los Angeles-based companies that acquired national multifamily and commercial properties via a tenants-in-common (TIC) investment structure. Combined, the real estate investment portfolio is worth $1.6 billion.
The SCI entities acquired and syndicated more than 60 multifamily, office, student housing and retail properties in California, Texas, Florida, Georgia, Arizona and New Mexico via TICs, which allowed for a fractional interest to be owned by two or more parties; however, the value of some of the TICs decreased significantly because of the real estate crisis.
“One of the things that was unusual about this was that the individual properties were owned by TICs. It’s very unusual for that many properties to all be in TICs,” Hoffman tells MHN. “The reason they were TICs is because that benefits people who invest money and can make a tax-free exchange. If it’s not the largest TIC group ever, it has to be the second or third largest, so it’s a substantial size when you add all of these properties up.”
The entities filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Central District of California in February 2011. At their most valuable, the SCI entities had interests in approximately 150, with a value of over $2 billion.
Hoffman was appointed chief restructuring officer of the SCI entities by the U.S. Bankruptcy Court for the Central District of California in October 2011. Since then, Hoffman has restructured management and secured exit financing as part of the plan for liquidation. Because of this, he was appointed liquidating trustee by Judge Peter H. Carroll, U.S. Bankruptcy Court, Central District of California, Los Angeles Division.
“There is also a substantial amount of money that is due to SCI for fees for the work they did originally in putting these deals together,” Hoffman says. “Although they’ve filed bankruptcy, they are still the estate, which is now me as liquidating trustee. Those were earned before the bankruptcy filings, so they are owed to SCI, so we will be collecting those as well.”
Hoffman says his role will focus on maximizing recovery for the SCI portfolio.
“Specific tasks will include arranging financing for the estate in order to secure and monetize assets over an extended period, establishing fair values of estate assets upon formation of the trust, and, as fiduciary, managing the affairs and decisions of the estate relating to its assets and to maximize realization of their values,” he says. “We will focus on operating the estate at reasonable cost and achieve the objectives of the Post-confirmation Oversight Committee and the Court.”