Greylock Capital seeks bankruptcy help to stem reversal of fortune
Greylock Capital Associates, a White Plains investment firm that has seen its assets plummet in recent years, has filed for Chapter 11 bankruptcy protection.
Greylock needs to get out of a Manhattan office lease that costs $100,000 a month, according to the petition filed Jan. 31 in U.S. Bankruptcy Court, White Plains, if it is to reorganize successfully and continue as a going concern.
In 2014, the firm leased the entire 24th floor of a midtown Manhattan office building, 11,400 square feet on Madison Avenue two blocks from Grand Central Terminal. The expectation was that business would continue to grow and employees would be added, according to an affidavit by CFO David Steltzer.
It did grow. By the end of 2017, Greylock was managing $1.1 billion in assets and employed 21 people.
But from 2018 to 2020, the firm faced “significant challenges,” according to Steltzer. Returns on investments were negative and investors were withdrawing funds from the flagship Greylock Global Opportunity Fund.
By the end of last year, Greylock was managing about $450 million, according to the affidavit, and employed nine people. It has to liquidate another $100 million by the end of March, reducing assets under management by 68% from the highpoint, if it finds no new investors.
Greylock notified the Manhattan landlord in December that it would try to use bankruptcy to get out of the lease. The firm proposed a buyout “superior to the treatment (the) landlord is entitled to in bankruptcy,” according to a court document, but the landlord rejected the proposal and made no counteroffer.
Greylock vacated the Manhattan office last month and now maintains an office at Steltzer”™s home in White Plains.
The firm is asking bankruptcy court to approve the lease rejection.
Without the relief, Steltzer said, Greylock will be “unable to pay its debts as they become due in the near term.”
Greylock Associates is the parent company of Greylock Capital Management, the manager of the flagship fund. The firm offers alternative investments ”“ such as distressed debt and sovereign debt ”“ to institutions and high net worth individuals.
Willem Humes is the CEO and chief investment officer and owns 64.4% of Greylock Capital Associates, according to a 2019 partnership tax return.
The partnership booked nearly $11.5 million in management and incentive fees that year. It recorded nearly $10.7 million in deductions, including almost $2.3 million in guaranteed payments to the partners, leaving net income of $799,154.
Besides Humes, the partners are Ajata Mediratta, President Jonathan Prin, head of research and Steltzer.