Real estate investor DBSI files liquidation plan

WILMINGTON, Del., July 19 (BestGrowthStock) – Failed U.S. real
estate investor DBSI Inc presented a liquidation plan to
bankruptcy court on Monday that pays less than 20 cents on the
dollar for about $800 million in claims.

DBSI, based in Meridian, Idaho, was a investment firm that
specialized in tenant-in-common arrangements and suffered from
the crash in commercial real estate that eventually exposed
improper uses of corporate cash.

The company filed for bankruptcy in late 2008 having
arranged more than 200 tenant-in-common or TIC arrangements.
Under the arrangements, DBSI would buy shopping malls,
apartment buildings and offices and then sell interests in the
property to investors.

DBSI would then lease the property from the investors and
sublease it to retailers or as office space as well as manage
the property.

However, a court-appointed examiner uncovered that the
company was raising money from investors who thought they were
purchasing stakes in real estate development projects. Instead
DBSI’s management was using the money to plug daily cash
needs.

“The global enterprise did not generate a profit for
investors and was kept afloat for many years by an
ever-increasing volume of new investor money and
heavily-leveraged real estate transactions,” said the
liquidation plan.

“This self-feeding cycle continued until the dislocation in
the real estate, credit and other financial markets, stymied
the debtors’ ability to raise sufficient new capital from
investors,” the plan said.

The company proposed creating liquidating trusts and
estimates that most creditors will recover only 18.5 percent of
what they are owed. Several large groups of creditors will
recover 6 percent of their claims or nothing at all, according
to the plan.

The case is DBSI Inc, U.S. Bankruptcy Court, District of
Delaware, No. 08-12687.

Stock Market News
(Reporting by Tom Hals; Editing by Tim Dobbyn)

Real estate investor DBSI files liquidation plan