A mini-bout of business bankruptcies has spread to Fairfield County”™s bastion of high-finance.
In mid-August, several corporate affiliates of SageCrest L.L.C. filed for federal bankruptcy protection from creditors, including Deutsche Bank, which is owed $7.5 million via its DB Structured Finance Inc. unit.
According to court documents, Deutsche Bank has been trying to collect more than $100 million from various SageCrest entities, and had demanded SageCrest liquidate assets to make the loan payment in question. .
SageCrest lists assets valued between $100 million and $500 million, without specifying a precise figure or the nature and liquidity of those assets.
A Deutsche Bank spokesman declined comment on the case, and at deadline SageCrest”™s attorney had not responded to a request for comment.
The company”™s largest unsecured creditor in Fairfield County is All Financial Group L.L.C., a Stamford-based life insurance company that is owed $200,000.
SageCrest is based in Bermuda and has its main office at Greenwich”™s Pickwick Plaza, which houses multiple financial firms and hedge funds. Run by Philip Milton, the company provides financing for companies that are unable to obtain capital from traditional sources such as banks.
The filing is the latest in an apparent uptick in business bankruptcy filings locally, including the luxury-yacht builder Derecktor Shipyards Connecticut L.L.C. of Bridgeport, which found itself in financial straits after a catamaran buyer missed payments.
Other bankruptcies in recent weeks have included Bethel-based BAXL Technologies Inc.; HK Collection L.L.C. and International Franchise Associates Inc., both based in Westport; Norwalk-based Jean Charles Enterprises L.L.C.; and Stamford Archery & Firearms L.L.C.
Additionally, the non-profit Stamford Center for the Arts filed for a bankruptcy restructuring following cuts in state funding.
In 2007, 264 businesses filed for bankruptcy protection in Connecticut federal court, according to the Administrative Office of the U.S. Courts. That was 45 more than in 2006 and the highest number since 1993, when 310 businesses went bankrupt.
The state appears to be flirting with that mark once more ”“ 73 Connecticut businesses declared bankruptcy in the first quarter, the most recent for which the federal government had published figures as of late August. Of that number, just 18 were Chapter 11 restructurings, with the remainder Chapter 7 dissolutions.
In 1982, 473 Connecticut businesses went bankrupt, the highest number in the past three decades.
As bad as things have gotten, the bankruptcy floodgates have yet to open, according to the Turnaround Management Association, which has a chapter in Hartford. In a poll this summer, turnaround experts predicted corporate-debt default rates will climb above 10 percent in 2009, as loans and other capital remain difficult to obtain.Â
Conventional Chapter 11 filings like SageCrest”™s may become more the exception than the rule, thanks to changes in the federal bankruptcy code in 2005 that are being tested for the first time in an economic trough.
“This wave is going to bring out the real problems that were created by the new bankruptcy law, which haven”™t been addressed because too few cases have been filed in the last two-and-a-half years,” said Bill Lenhart, a TMA member and partner in the Manhattan office of BDO Seidman L.L.P.