Evergreen Gardens parent All Year files separate Chapter 11 case

By Sarah Lizee

Olympia, Wash., Dec. 14 – Evergreen Gardens Mezz LLC’s parent company, All Year Holdings Ltd., filed a Chapter 11 bankruptcy petition on Tuesday with the U.S. Bankruptcy Court for the Southern District of New York.

On Feb. 22, 2021, Evergreen Gardens Mezz filed its own voluntary Chapter 11 case, and debtors Evergreen Gardens I LLC and Evergreen Gardens II LLC filed cases on Sept. 14. Each of the Evergreen debtors is a wholly owned indirect subsidiary of All Year.

However, All Year’s Chapter 11 case is being separately administered from the Evergreen debtors’ Chapter 11 cases.

As previously reported, the joint Chapter 11 plan for the Evergreen debtors was confirmed on Nov. 5 and took effect on Dec. 2.

All Year currently has about $1.6 billion of outstanding funded debt, comprised of about $800 million in bonds issued by All Year, and roughly $760 million in property level mortgage debt.

“Like many real estate businesses, the parent debtor struggled to service its significant debt burden as its revenues, derived primarily from residential and commercial rental income streams, were adversely impacted by the ongoing Covid-19 pandemic,” Assaf Ravid, chief executive officer and chief restructuring officer of All Year, said in a declaration filed Tuesday.

“Despite the recent modest uptick in the New York real estate market, the parent debtor’s current and projected revenues remain insufficient to service its debt.”

All Year engaged with various stakeholders throughout its capital structure to identify a path forward to maximize the value of its assets, including opportunistically disposing of a number of underperforming assets and settling some outstanding claims.

In connection with these efforts, the Evergreen debtors filed their cases to complete a value-maximizing sale of the Denizen, a luxury rental complex in Bushwick, for the benefit of their creditors.

During this process, All Year has also engaged in extensive and ongoing discussions with its bondholders and other constituents regarding potential transactions to restructure its other holdings.

Since April, All Year and representatives of the series B, C, D and E bondholders have engaged in a wide-ranging, public process to solicit interest and offers from potential third-party investors to either recapitalize the parent debtor or undertake an outright purchase of All Year.

Through this process, All Year garnered substantial interest and is now advanced in selecting and finalizing an exit transaction for the purchase of its equity.

During this period, All Year’s board of directors has overseen its restructuring with the protection of an agreement with the sole shareholder, Yoel Goldman, under which he cannot change the board or take actions that would adversely impact the process. The agreement with Goldman, which expires on Jan. 4, was reached after he previously took control of the board and authorized payments satisfying obligations of All Year that he also personally guaranteed.

Ravid said that, unable to extend the arrangement with Goldman past Jan. 4 on acceptable terms, and facing bondholder threats to start involuntary insolvency proceedings in Israel due to existing defaults, All Year’s restructuring process became exposed to potential insolvency litigation across multiple jurisdictions.

Finally, on Monday, All Year became aware that a judgment in the amount of $37 million was entered on Thursday against it in connection with certain confessions of judgment executed by Goldman on behalf of All Year, without receiving board or other necessary approvals.

“The threat that this judgment could be levied against assets of the parent debtor, including its cash, precluded the parent debtor from continuing its restructuring process outside of the protections available under Chapter 11 of the bankruptcy code,” Ravid said.

Ravid said All Year has commenced the Chapter 11 Case with trustee Mishmeret Trust Co. Ltd., on behalf of the bondholders, to complete the restructuring.

All Year is also considering filing an application with the courts in the British Virgin Islands to assist in the implementation of a transaction through the Chapter 11 case.

In addition, as the deeds of trust and other documents governing All Year’s relationship with the bondholders are governed by Israeli law, it may also become necessary at some point for the company to start a recognition proceeding in Israel to facilitate the restructuring.

Ravid said All Year is not seeking any first-day relief at this time and it currently has enough liquidity to manage its ongoing cash needs and the needs of its subsidiaries.

Rather, All Year plans to use this time to continue its negotiations with the potential bidder and other stakeholders and to promptly propose to the court a path forward.

The company listed $1 billion to $10 billion in assets in its petition.

Evergreen Gardens is a subsidiary of All Year Holdings Ltd., which focuses on the development, construction, acquisition, leasing and management of residential and commercial income producing properties in Brooklyn, N.Y. Evergreen Gardens filed bankruptcy on Feb. 22, 2021 under Chapter 11 case number 21-10335.

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