Share
The inability to refinance a loan on part of an uptown building has pushed a local development company into Chapter 11 bankruptcy protection, its co-owner said Friday.
Jim Donnelly, co-owner of TBG Development, said he hopes the Friday filing will allow his company to stave off foreclosure and give it time to come up with a reorganization and repayment plan. According to court documents, TBG has few debts, and the largest by far is $1.15 million owed to RBC Bank.
The move is another sign of a difficult climate for commercial developers, who have struggled to finance projects as lenders have restricted credit.
Donnelly, his wife and her sister formed TBG in 2005, buying the building at 221 S. Tryon St. and then selling off all but the first floor. They then opened, and continue to own, Emerson Joseph men's grooming lounge there.
However, TBG fell behind on its loan payments on a few occasions, Donnelly said, and RBC Bank filed a foreclosure notice this summer. He said he has tried to work out a solution with the bank and repeatedly offered to make his payments current, but the bank declined. His sense, he said, is that RBC wants out of the loan altogether and is proceeding based on factors that extend to the broader economic environment.
"I feel like we're a cog in a much bigger picture and a much bigger wheel," he said. "Two years ago you could have refinanced that property 20 different places. But today there is zero chance of refinancing a commercial property that's not worth as much as you owe on it ... All we really need is more time to continue to work on a solution."
The bankruptcy filing was done in part to protect Emerson Joseph, which is a separate company and continues to operate normally, he said. Donnelly has previously been involved with redeveloping historic properties, such as the Trust, a boutique condo project in a former savings and loan, and the Grace Event Center, in the former Grace AME Zion Church.
He is trying to restore the Carolina Theatre and add high-end condos there. The city agreed to sell the building in 2006, but financing has been difficult to find, and the City Council this year approved extending the closing deadline until December 2011. That project and others he has are separate from TBG and are unaffected by the filing, he said.
TBG is continuing to seek other financing options and plans to present a reorganization plan to the bankruptcy judge, Donnelly said.
"We have every intention of finding a solution and going forward," he said. "You can't as a business owner divorce yourself from your individual responsibility, but you also look at the macro environment we're operating in."
