Ciena Capital, the New York-based real estate lender, has filed for bankruptcy protection blaming the credit crisis for a “significant” deterioration in the value of its assets.
Filing for Chapter 11 protection, Ciena – a portfolio company of listed private equity fund manager Allied Capital – said its assets had declined to such an extent in the wake of the credit market dislocation that bankruptcy protection was the best course of action.
A statement from Allied said the “voluntary” bankruptcy filing would prevent Ciena from having to sell assets “in today’s unfavorable market conditions.”
Allied had guaranteed Ciena’s revolving credit facility after acquiring the company, formerly known as Business Loan Express, in 2000. It is now expecting to pay $320 million to lenders, according to a statement – roughly half from cash resources and the remainder borrowed on an unsecured basis.
Allied said it expected to record a “substantial” write-down on its investment in Ciena saying: “The amount and timing of any future realized loss on its investment in Ciena will depend on future asset sales, future market conditions and the outcome of Ciena's bankruptcy proceedings.”
According to the bankruptcy filing, Ciena – which provided up to $10 million in commercial real estate loans – and 10 affiliates had between $100 million and $500 million of both assets and liabilities.
In July, CBRE Investors hired former Ciena senior managing director Frank Scavone to work with the firm’s executive managing director Ethan Penner on developing new investment programs. Scavone was previously responsible for developing debt and preferred equity products.