IMH Financial files bankruptcy; will emerge under JPMorgan ownership

By Caroline Salls

Pittsburgh, July 23 – IMH Financial Corp. filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the District of Delaware.

According to a statement filed with the court by chairman and chief executive officer Chadwick S. Parson, IMH reached a restructuring support agreement under which JPMorgan Chase Funding Inc., Juniper parties and Bain parties agreed to the terms of a plan of reorganization.

The Juniper parties include Juniper Capital Asset Management, LLC, JCP Realty Partners, LLC, Juniper NVM, LLC and Juniper Investment Advisors, LLC, and the Bain parties are ITH Partners, LLC and Lawrence D. Bain.

The plan consensually restructures IMH’s obligations to holders of various series of preferred stock held by JPMorgan and the Juniper parties.

General unsecured claims will be left unimpaired.

Holdings of existing common stock and warrants will receive a cash recovery.

Parsons aid IMH will emerge from Chapter 11 as a privately held enterprise owned entirely by JPMorgan.

The CEO said the support agreement largely resulted from the efforts of a special committee formed from the IMH board’s independent directions in 2019 in connection with the board’s expectation that the company’s cash position would most likely be insufficient to satisfy its obligation to redeem its preferred equity.

Parson said more than $80 million in preferred equity obligations will be retired under the proposed plan.

In conjunction with the bankruptcy filing, JPMorgan has agreed to provide $10.15 million in DIP financing to fund IMH’s operations while in Chapter 11.

The DIP facility will mature on Nov. 20.

Interest will accrue at the Libor rate, but the applicable margin has not yet been determined.

A total of $1.9 million of the DIP financing will be available on an interim basis.

JPMorgan also agreed to provide a three-year, $66 million exit facility to fund plan distributions and provide working capital to the company upon emergence. Interest on the exit facility will accrue at Libor plus 1,000 bps with a 1% floor.

According to court documents, IMH has $121.98 million in assets and $128.72 million in debt as of March 31.

The company’s largest unsecured creditor is MidFirst Bank, with a $37 million bank loan claim. No other unsecured creditors were listed with claims of $1 million or more.

IMH is a private real estate lending and investment company based in Scottsdale, Ariz. The Chapter 11 case number is 20-11858.

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