(Updates with company comment in third paragraph.)
Oct. 14 (Bloomberg) -- Security National Properties Funding III LLC, an affiliate of real-estate investment company Security National Master Holding Co., filed for bankruptcy protection from creditors who are owed as much as $500 million.
Security National filed a Chapter 11 case in Wilmington, Delaware, last night along with nine related companies. Security National said it had fewer than 1,000 creditors and fewer than $50 million in assets. The company didn’t provide details about why it filed. Chapter 11 of the U.S. Bankruptcy Code is typically used by companies that plan to keep operating while they reorganize.
“The company intends to work with its creditors to emerge from bankruptcy as quickly as possible while executing a plan of reorganization that preserves the company’s operations,” Security National said in an e-mailed statement.
The company said it owns “approximately” 10 regional shopping centers and 21 multi-tenant office buildings in 15 states. The portfolio has “solid cash flows” Chad Christensen, the Security National’s senior vice president of real estate, said in the statement.
AOI Corporation, of Omaha, Nebraska, is the company’s biggest unsecured creditor, owed $1 million, according to court documents.
The other Security National affiliates that filed bankruptcy included ITAC 190, LLC and Sequoia Investments III. All of the companies listed Baton Rouge, Louisiana, as their headquarters.
Security National is indirectly owned by Security National Master, based in the northern California city of Eureka, according to bankruptcy court records. Security National Master is a loan servicing and real estate investment company, whose president and chief executive officer is Robin P. Arkley II.
Bank of America Corp. sued Arkley last year, claiming he owed the bank $50 million related to losses on a package of so-called warehouse loans that funded a series of commercial and residential mortgages. Bank of America dismissed the lawsuit a few months after it was filed without saying why, according to court documents.
Arkley didn’t immediately return a call for comment.
Arkley, of Eureka, California, said on Security National Master’s website that he founded the firm in the 1980s, after working as a tax accountant in Los Angeles and an attorney in Washington, D.C.
He started the company when he bought a failed Alaska bank’s mortgage loan portfolio and began acquiring “distressed assets from government entities. The firm branched out into property management, real estate loans and bond-securitization, to effect “fair, risk-adjusted returns for our investors,” according to the website.
John L. Piland, chief financial officer of Security National Master, wasn’t immediately available to return a phone call and e-mail seeking comment on the bankruptcy filings.
The case is In re: Security National Properties Funding III, LLC, 11-13277, U.S. Bankruptcy Court, District of Delaware (Wilmington).
--With assistance from Sophia Pearson in Philadelphia. Editors: Stephen Farr, Mary Romano
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