NEW YORK CITY-Santa Ana, CA-based brokerage firm Grubb & Ellis is expected to sell substantially all its assets to BGC Partners Inc. at a sale hearing in US Bankruptcy Court of the Southern District of New York this afternoon at 3 p.m.
The action comes after the firm canceled a bankruptcy auction and approved bidding procedures and a $30 million stalking horse contract from BGC, court documents show.
“Given their financial condition, financing arrangements, and capital structure, the debtors are unable to obtain financing from sources other than the debtor-in-possession lender on terms more favorable than the DIP facility,” according to a court order filed on March 22.
Grubb filed for bankruptcy pursuant to chapter 11 on Feb. 20 following a thorough and rigorous process and the evaluation of all available options. After filing for bankruptcy protection and signing an agreement with BGC on Feb. 21, the company planned to operate its business as a debtor-in-possession and implemented the transaction as an asset sale under Section 363 of the US Bankruptcy Code.
The news of the sale, however, did not come as a shock to the industry. GlobeSt.com previously reported that Grubb was going through a review process on whether to sell or merge the company, and unnamed sources said that the firm had furloughed approximately two dozen employees for 90 days at the company’s California headquarters in November 2011.
Thomas D’Arcy, president and CEO of Grubb & Ellis, previously stated that a partnership with BGC provides the “best platform” for the company’s brokerage professionals, employees and clients. In a prepared statement released on Feb. 21, he said BGC’s “willingness to provide incremental financing” for company’s senior debt demonstrates its “commitment to success” of the firm.
“We believe the transaction will be seamless for our clients and we expect no disruption to the company's operations,” he added.
BGC, a global brokerage firm, also recently acquired Newmark & Co. Real Estate Inc., which operates as Newmark Knight Frank in New York City and Knight Frank in London. BGC gained control of Newmark’s US commercial real estate brokerage and advisory firm, plus a controlling interest in its affiliated companies, encompassing 425 brokers, GlobeSt.com reported.
With BGC’s acquisition of Newmark Knight Frank, D’Arcy stated that the transaction “will bring together two strong brands to create a powerhouse in the commercial real estate space.”
The case is filed under 12-10685-mg in US Bankruptcy Court of the Southern District of New York (Manhattan) under United States Bankruptcy Judge Martin Glenn.
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