Today it was announced that Grubb & Ellis is entering into a bankruptcy filing because of the struggling commercial real estate market. The company ran into problems that led to the bankruptcy filing because of facing $30 million in debt that was set to mature on March 1. Because of financial troubles the company does not have the cash reserves needed to push through the first quarter of the year.
It was announced that BGC partners Incorporated agreed to by Grubb & Ellis with a $30 million credit bed along with $4.8 million in bankruptcy financing. President for Grubb & Ellis, Thomas D’Arcy stated, “We believe this transaction enhances our value proposition to our clients and strengthens our position in the commercial real estate marketplace.” He also said in a prepared statement, “BGC’s strong capital base, robust technology and deep commitment to its brokers provide Grubb & Ellis with scalability along with the resources needed by our professionals to deliver exceptional service to our clients. We are confident that this will be a seamless transition for our clients and becoming part of BGC is an extremely attractive opportunity for our brokerage professionals and employees.”
Prior to Grubb & Ellis filing for bankruptcy, many brokers from the Boston office saw the writing on the wall and jumped ship to other companies. Beyond the Boston office, Grubb & Ellis has lost hundreds of brokers nationwide due to the Chapter 11 bankruptcy filing.
Prior to the Chapter 11 bankruptcy filing Grubb & Ellis employed 3000 people in 90 offices nationwide. The real estate firm claims $150 million in assets and $167 million in debts according to bankruptcy court documents. Grubb & Ellis started having problems after losing its largest property management contract valued at $40 million a year in 2011. Because of higher operations costs and loss of revenue the company was forced to file for bankruptcy.