On February 24, 2012, U.S. Capital/Fashion Mall, LLC, and its parent company, U.S. Capital Holdings, LLC (collectively, “U.S. Capital”), filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the Southern District of Florida.  U.S. Capital owns the Plantation Fashion Mall in Broward County, Florida.  According to the company’s Chapter 11 Case Management Summary (the “Summary” or “Summ.”) filed with the Bankruptcy Court, U.S. Capital owns what it describes as a “major regional retail mall and office building located at the geographic center of Broward County …” Summ. at *2.

Events Leading to Bankruptcy

U.S. Capital and its insurers have been involved in six years of coverage litigation following damage sustained by the mall during Hurricane Wilma. The company contends that hurricane damage it sustained from Wilma caused it to lose one of its major anchor tenants.  In addition to hurricane damage, U.S. Capital was also forced to deal with fire safety issues which the company believes were left behind by the mall’s previous owners.  Ultimately, the City of Plantation forced the mall to cease operations and terminate its leases.  Summ. at *2.

Following the shut down of the mall, U.S. Capital was able to negotiate lease termination agreements with the majority of its tenants.  Two tenants, however, which operated restaurants on the property, filed lawsuits that were consolidated and taken to trial. In December of last year, one of the plaintiffs in the lawsuits obtained a judgment against U.S. Capital in excess of $3.5 million.  The company expects that following post trial briefing, the second plaintiff will obtain a judgment in excess of $3.3 million.  According to U.S. Capital, it is the lease termination actions which caused it to file for bankruptcy protection.  Summ. at *3-4.

U.S Capital’s Financials

According to its Summary, U.S. Capital Holdings, LLC, which owns U.S. Capital/Fashion Mall, LLC, has a value of $0.  U.S. Capital/Fashion Mall, LLC, which owns the Plantations Fashion Mall property, has an appraised value of $49 million.  The company also estimates that it owns insurance damage and bad faith claims worth between $9.4 and $14.4 million.  Summ. at *8.

Objectives in Bankruptcy

U.S. Capital filed for bankruptcy protection with the hopes of securing debtor financing and proceeding with the redevelopment of what it calls the “321 North” project.  The company also hopes that while in bankruptcy it can avoid certain judgment liens obtained against it and put together a plan of reorganization that will allow it to pay off unsecured creditors.  U.S. Capital is represented by the law firm GrayRobinson, P.A.