Evergreen Gardens Mezz LLC
CASE SUMMARY: All Year Management’s Evergreen Gardens Mezz Seeks ‘Path Forward’ on Denizen Property
Tue 02/23/2021 16:06 PM
Relevant Documents:
Voluntary Petition
First Day Declaration
All Year Management affiliate Evergreen Gardens Mezz, which, together with certain nondebtor affiliates, owns the “the Denizen,” a luxury apartment rental complex that spans two city blocks in Bushwick, filed chapter 11 last night, Feb. 22, in the Southern District of New York. The filing follows the debtor’s mezzanine lender (MREF REIT Lender 9 LLC, owed $73 million) initiating a Uniform Commercial Code public sale and foreclosure against the Denizen. Despite a two-week adjournment of the scheduled UCC sale, the mezzanine lender would not agree to a further postponement to “afford All Year time to discuss with its other stakeholders a path forward regarding the Denizen and to present the Mezzanine Lender with a comprehensive restructuring proposal,” leading to the chapter 11 filing. According to the first day declaration of Joel Biran, managing member of restructuring firm Gabouloz LLC and chief restructuring officer, the Denizen “constitutes one of All Year’s most valuable assets and is central to All Year’s ongoing restructuring discussions.” Continue reading for our First Day team's case summary of the All Year Management chapter 11 filing and Request a Trial for access to the linked documents and analysis as well as our coverage of all U.S. chapter 11 cases filed since 2012 with over $10 million in liabilities.
The debtor says it has no operations and is not seeking any first day relief, but rather, is focused on continuing discussions with All Year’s bondholders and other stakeholders, including the mezzanine lender, “to develop a path forward with respect to the Denizen and promptly present to the Court a restructuring solution that maximizes value for all parties in interest.”
An initial case conference is scheduled for March 18 at 10 a.m. ET.
The debtor reports between $50 million and $100 million in both assets and liabilities, and its prepetition capital structure includes:
The mezzanine loan is secured by a pledge of 100% of the equity interests of Evergreen Gardens I LLC and is guaranteed by Goldman, “which includes full recourse in the event of a voluntary bankruptcy filing by the Debtor.”
Evergreen Gardens I, the debtor’s direct subsidiary and owner of the Denizen X property, has outstanding funded obligations consisting of a $170 million property level loan with JPMorgan, secured by its interest in the Denizen X.
All Year had outstanding funded debt obligations in the aggregate amount of about $1.6 billion as of the petition date, consisting of secured bonds, unsecured bonds, mezzanine debt and property-level mortgage debt. All Year Holdings’ secured bonds are secured by mortgages issued by various All Year entities, which hold properties in Brooklyn, including the Denizen. Mishmeret Trust Services Co. Ltd. serves as trustee with respect to each of the bonds.
During All Year Holding’s prepetition negotiations with its secured and unsecured bondholders, it issued a Class A voting share to Biran as CRO and Ephraim Diamond as associate restructuring officer. This share entitles those parties to vote on appointment or removal of the directors of All Year Holdings, as the owner of each of its direct and indirect subsidiaries, including the debtor, but confers no other voting rights. The voting rights are set to expire Sept. 20. The Class A share is entitled to $1 “upon the liquidation of All Year Holdings but confers no right to participate in any dividend or other distribution of All Year Holdings at any time.”
The company attributes the bankruptcy filing to the ongoing Covid-19 pandemic, which has made it difficult for tenants to timely pay rents and has spurred demands by prospective tenants for significant rent decreases and other lease concessions. All Year suspended interest payments on its unsecured bonds in November 2020 and entered into an agreement with the trustee in December leading to appointment of Biran as CRO and Diamond as associate restructuring officer, after which All Year “quickly moved” to explore restructuring alternatives.
The debtor is represented by Weil Gotshal. The case has been assigned to Judge Martin Glenn (case No. 21-10335).
Background
The debtor is a subsidiary of All Year, whose portfolio encompasses about 2,652 residential units, 94 commercial units and 183 hotel rooms in the Bushwick, Williamsburg and Bedford-Stuyvesant neighborhoods of Brooklyn, representing a net book value in excess of $2.4 billion.
The Denizen, located on the site of the former Rheingold Brewery, consists of two adjacent units, denoted in the filings as Denizen X and Denizen Y. The debtor owns 100% of the equity interests in nondebtor Evergreen Gardens I LLC, which owns Denizen X, and nondebtor affiliate Evergreen Gardens Holdings II LLC, which owns Denizen Y. Revenue generated at Denizen X is used in part to service the property-level mortgage for Evergreen Gardens I, whose excess cash is used to service the debtor’s debt payments on the mezzanine loan.
The Denizen offers about 900 modern studio, one- and two-bedroom apartments and is situated around a roughly 17,850-square-foot courtyard. According to the debtor, the Denizen affords its residents abundant greenspace, a public park and promenade, an on-site brewery, a community chef’s kitchen, rooftop gardens, a dog park and spa, a cafe with co-working space, a curated art gallery, a game room, and fitness centers. Denizen X and Denizen Y share facilities and sit adjacent to each other. The mutual access to shared facilities provides for a wider range of residential amenities, “thereby making the Denizen a more desirable property and enhancing its value.”
The company’s corporate organizational chart is below:
Voluntary Petition
First Day Declaration
| Summary |
| Evergreen Gardens Mezz is 100% owned by All Year Holdings, a real estate development, construction, acquisition, leasing and management company focused on residential and commercial properties in Brooklyn |
| Evergreen, along with certain nondebtor affiliates, owns the Denizen (one of All Year’s “most valuable” assets) in Bushwick |
| Case precipitated by initiation of UCC foreclosure sale by debtor’s mezzanine lender |
| Not seeking any first day relief, but focused on continuing discussions with All Year’s bondholders and other stakeholders |
All Year Management affiliate Evergreen Gardens Mezz, which, together with certain nondebtor affiliates, owns the “the Denizen,” a luxury apartment rental complex that spans two city blocks in Bushwick, filed chapter 11 last night, Feb. 22, in the Southern District of New York. The filing follows the debtor’s mezzanine lender (MREF REIT Lender 9 LLC, owed $73 million) initiating a Uniform Commercial Code public sale and foreclosure against the Denizen. Despite a two-week adjournment of the scheduled UCC sale, the mezzanine lender would not agree to a further postponement to “afford All Year time to discuss with its other stakeholders a path forward regarding the Denizen and to present the Mezzanine Lender with a comprehensive restructuring proposal,” leading to the chapter 11 filing. According to the first day declaration of Joel Biran, managing member of restructuring firm Gabouloz LLC and chief restructuring officer, the Denizen “constitutes one of All Year’s most valuable assets and is central to All Year’s ongoing restructuring discussions.” Continue reading for our First Day team's case summary of the All Year Management chapter 11 filing and Request a Trial for access to the linked documents and analysis as well as our coverage of all U.S. chapter 11 cases filed since 2012 with over $10 million in liabilities.
The debtor says it has no operations and is not seeking any first day relief, but rather, is focused on continuing discussions with All Year’s bondholders and other stakeholders, including the mezzanine lender, “to develop a path forward with respect to the Denizen and promptly present to the Court a restructuring solution that maximizes value for all parties in interest.”
An initial case conference is scheduled for March 18 at 10 a.m. ET.
The debtor reports between $50 million and $100 million in both assets and liabilities, and its prepetition capital structure includes:
- Secured debt:
- MREF REIT Lender 9 LLC mezzanine loan: $73 million (including principal, accrued interest, default interest and a forbearance fee).
- Unsecured debt: The debtor has no unsecured debt according to the petition.
- Equity: The debtor is 100% owned by All Year Holdings LLC, which is 100% owned by All Year Holdings Ltd. Yoel Goldman owns 100% of the beneficial equity interests of All Year. All Year was established under the laws of the British Virgin Islands.
The mezzanine loan is secured by a pledge of 100% of the equity interests of Evergreen Gardens I LLC and is guaranteed by Goldman, “which includes full recourse in the event of a voluntary bankruptcy filing by the Debtor.”
Evergreen Gardens I, the debtor’s direct subsidiary and owner of the Denizen X property, has outstanding funded obligations consisting of a $170 million property level loan with JPMorgan, secured by its interest in the Denizen X.
All Year had outstanding funded debt obligations in the aggregate amount of about $1.6 billion as of the petition date, consisting of secured bonds, unsecured bonds, mezzanine debt and property-level mortgage debt. All Year Holdings’ secured bonds are secured by mortgages issued by various All Year entities, which hold properties in Brooklyn, including the Denizen. Mishmeret Trust Services Co. Ltd. serves as trustee with respect to each of the bonds.
During All Year Holding’s prepetition negotiations with its secured and unsecured bondholders, it issued a Class A voting share to Biran as CRO and Ephraim Diamond as associate restructuring officer. This share entitles those parties to vote on appointment or removal of the directors of All Year Holdings, as the owner of each of its direct and indirect subsidiaries, including the debtor, but confers no other voting rights. The voting rights are set to expire Sept. 20. The Class A share is entitled to $1 “upon the liquidation of All Year Holdings but confers no right to participate in any dividend or other distribution of All Year Holdings at any time.”
The company attributes the bankruptcy filing to the ongoing Covid-19 pandemic, which has made it difficult for tenants to timely pay rents and has spurred demands by prospective tenants for significant rent decreases and other lease concessions. All Year suspended interest payments on its unsecured bonds in November 2020 and entered into an agreement with the trustee in December leading to appointment of Biran as CRO and Diamond as associate restructuring officer, after which All Year “quickly moved” to explore restructuring alternatives.
The debtor is represented by Weil Gotshal. The case has been assigned to Judge Martin Glenn (case No. 21-10335).
Background
The debtor is a subsidiary of All Year, whose portfolio encompasses about 2,652 residential units, 94 commercial units and 183 hotel rooms in the Bushwick, Williamsburg and Bedford-Stuyvesant neighborhoods of Brooklyn, representing a net book value in excess of $2.4 billion.
The Denizen, located on the site of the former Rheingold Brewery, consists of two adjacent units, denoted in the filings as Denizen X and Denizen Y. The debtor owns 100% of the equity interests in nondebtor Evergreen Gardens I LLC, which owns Denizen X, and nondebtor affiliate Evergreen Gardens Holdings II LLC, which owns Denizen Y. Revenue generated at Denizen X is used in part to service the property-level mortgage for Evergreen Gardens I, whose excess cash is used to service the debtor’s debt payments on the mezzanine loan.
The Denizen offers about 900 modern studio, one- and two-bedroom apartments and is situated around a roughly 17,850-square-foot courtyard. According to the debtor, the Denizen affords its residents abundant greenspace, a public park and promenade, an on-site brewery, a community chef’s kitchen, rooftop gardens, a dog park and spa, a cafe with co-working space, a curated art gallery, a game room, and fitness centers. Denizen X and Denizen Y share facilities and sit adjacent to each other. The mutual access to shared facilities provides for a wider range of residential amenities, “thereby making the Denizen a more desirable property and enhancing its value.”
The company’s corporate organizational chart is below:
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