Home News & Insights 3443 Zen Garden, LP Update: Bankruptcy Court Approved Milligan’s Proposed Plan
February 9, 2021
3443 Zen Garden, LP Update: Bankruptcy Court Approved Milligan’s Proposed Plan
By Harney Partners

Greg Milligan, EVP at Harney Partners, served as Chapter 11 Trustee for 3443 Zen Garden, LP, and in that capacity obtained Bankruptcy Court approval of his proposed Plan on January 27, 2021. The Debtor’s primary asset was a 110-acre office and manufacturing campus in East Austin previously constructed and occupied by Motorola, Inc.

In confirming Milligan’s plan, the Court 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 the Trustee and also all the other parties.”

Following an international marketing effort last summer, the real property was sold in October of 2020 to the Debtor’s senior secured lender via credit bid after the court-approved sale process failed to obtain offers higher than the lender’s $100 million in asserted claims. Despite more than $60 million in unsecured deficiency claims held by such lender and other subordinated secured creditors, Milligan was able to reach settlements with all such deficiency claimants such that they subordinated their claims to the class of general unsecured creditors in the Plan.

Without such agreed subordination, the claims of general unsecured creditors would have been swamped and their distributions diluted to meaningless dividends. With the agreed subordination of all deficiency claims, the confirmed Plan provides an 80% dividend, and with other assets to administer, Milligan believes that a full recovery of 100% is a possibility for the general unsecured class of creditors, which is a remarkable outcome in a case with more than $60MM of deficiency claims.