Capmark Should Make for an Interesting Monday

|
Includes: C, GS, JPM, KKR
by: Ray

Capmark filed for bankruptcy Sunday, which was not surprising, but it this will create a stir in the markets on Monday. It makes me happy that I am short as hell, though I am sure this is spun as some sort of green shoot-- on CNBC at least.

Capmark, created out of the commercial real estate arm of GMAC, was negotiating with its creditors, Citi (NYSE:C) and JP Morgan (NYSE:JPM), but apparently that did not go as planned. The move also wipes out private equity stakes from KKR (NYSE:KKR), Goldman Sachs Capital Partners (NYSE:GS) and Five Mile Capital. The consortium bought Capmark for $1.5B in cash and $7B in debt. KKR has already written down its investment in this company.

According to the bankruptcy filing, the group owned 75.4 percent of the company while GMAC, or the General Motors Acceptance Corp, owned 21.3 percent. Employees and directors owned most of the remaining stock. Equity investors are typically wiped out in bankruptcy.

Capmark listed $20.1 billion in assets and $21 billion in liabilities as of June 30, 2009 in the bankruptcy filing, which was made in U.S. Bankruptcy Court in Wilmington, Delaware.

I guess this confirms the rumors about the commercial real estate business being just fine…