Case Study:
3443 Zen Garden, LP
Former 110-acre Motorola Site Sold in Chapter 11 Bankruptcy Auction During Pandemic
Motorola’s 110-acre campus located six miles from downtown Austin and near Austin Bergstrom International Airport was largely abandoned and sat stagnant for more than a decade prior to purchase by Zen Garden, LP. The developer’s goal was to redevelop the property into a 110-acre mixed use campus with offices, hotels, and retail spaces. Unfortunately, legal disputes among its partners and with its senior secured lender led to a cessation of meaningful redevelopment work, a failed receivership proceeding in state court and ultimately an involuntary Chapter 11 filing.
The Solution
After the Bankruptcy Court approved the involuntary petition, the petitioning creditors filed a motion for the appointment of a trustee
Greg Milligan was appointed Chapter 11 Trustee
Milligan determined that a continuation of the redevelopment was not feasible and a sale of the property was required
Cushman & Wakefield was engaged to assist in the sale of the property
The opportunity was marketed to more than 2,500 targets with 79 potential buyers executing nondisclosure agreements
The Results
After a court-approved sale process, which included the senior lender’s right to credit bid its asserted claim of approximately $100MM, the lender was the highest bidder at $45 million and the sale was closed on October 14, 2020.
Harney Partners was able to reach settlements with all deficiency claimants such that they subordinated their claims to the class of general unsecured creditors in the Plan
By April of 2021, all general unsecured creditors received a full recovery of 100%, which was an extraordinary outcome in a case with more than $60MM of deficiency claims
In confirming Milligan's Plan, Bankruptcy Judge H. Christopher Mott noted the outcome for creditors was a “remarkable result” that required “a lot of negotiating, a lot of concessions, a lot of very good and solid critical thinking by [Milligan].”
Services & Roles
Bankruptcy Advisory
Chapter 11 Trustee
Financial Advisory
*Some engagements may have been performed by team prior to joining Harney Partners.
