According to Hoffman, the SCI entities acquired and syndicated more than 60 multifamily, office, student housing and retail properties—primarily in California, Texas, Florida, Georgia, Arizona and New Mexico—via TICs, which allow capital gains to be deferred by investors. In this type of property ownership, a fractional interest is owned by two or more parties, yet following the real estate slump the value of some TICs decreased significantly.

“Both SCI entities made large sums of money through acquisitions of premiere real estate assets and related acquisition fees—which were partially deterred—and when the economy stalled, were unable to pay their creditors,” Hoffman explained in a prepared statement. “Our goal as liquidators is to efficiently maximize recovery.”

The entities filed a voluntary petition for reorganization under Chapter 11 in the Court in February 2011. At their peak, the SCI entities syndicated interests in approximately 150 properties valued at more than $2 billion. Through fractional TIC co-ownership facilitated through 1031 exchanges by individual investors, SCI entities facilitated larger, high-quality commercial property investments to individual real estate buyers nationwide.

Specific responsibilities initially performed by Trigild include evaluating the business and its financial/operational situation, assisting the companies’ financial management, researching ownership structure and transactions, insuring compliance with administrative reporting and creating a five-year operating budget for the estate.

Hoffman said Trigild was selected for the work due to its extensive experience in an array of business sectors on a nationwide basis, including liquidations, real estate management and operating businesses.

Hoffman tells GlobeSt.com that the industry will see a number of similar foreclosure incidents and bankruptcy filings as a result of the economic downturn. “As individual properties face the requirement of needing more money over the next several years, they will either have to find more equity or refinance. In the current market, that’s going to be very difficult, particularly when the property’s value is less than the amount of the debt—there’s no equity, so you can’t borrow enough to pay off the debt.”

Most investors and lenders would rather wait until a property goes into foreclosure to invest money in it, since the purchase price would be much lower at that point, Hoffman adds.

Since each property in SCI’s portfolio is owned by an individual TIC group—not by SCI, Hoffman’s role will be collecting money that’s due SCI, since the company had agreed when the TICs were organized to defer half of the money it was owed until after the properties were sold or foreclosed. “There’s a lot of money due SCI, so that’s a part of what I’ll be collecting, basically to give to the creditors.”

Hoffman also tells GlobeSt.com that SCI does own an interest in close to 100 LLCs that in turn have TIC ownership interest. “Originally, we were told there was no relationship, but I was appointed as CRO months ago, and I started to understand that those entities are related to SCI. The Court hasn’t dealt with that subject yet, but our opinion at this stage is they belong to SCI.”

As GlobeSt.com recently reported, last month Trigild moved its corporate headquarters to new 13,500-square-foot offices in the heart of the Golden Triangle/University Towne Centre neighborhood at 9339 Genesee Ave. The 35-year-old firm was previously located in the Del Mar Heights area.