Local firm's Carolina development slides into bankruptcy

Back to TopCommentsE-mailPrintBookmark and Share

A second residential project in North Carolina led by Flaherty & Collins Properties has landed executives of the Indianapolis-based development firm back in bankruptcy court.

Flaherty & Collins’ Brier Creek FC LLC filed for Chapter 11 bankruptcy reorganization in Indianapolis on Tuesday, listing both liabilities and assets of between $10 million and $50 million. It's the second Flahery & Collins project in North Carolina to experience bankruptcy in the past six months.

Flaherty & Collins is the developer of The Exchange at Brier Creek Apartments, a mixed-used project in Raleigh, N.C., featuring a 274-unit complex, movie theater and fitness center. Brier Creek is the owner of the complex.

The Brier Creek complex was finished in 2008 and has an occupancy rate of 93 percent, according to court documents.

A spokesman for Flaherty & Collins blamed Brier Creek FC’s financial troubles on an outside management company it used before turning those responsibilities over to its Flaherty & Collins Management division.

“They failed to get it leased,” Mark Conover said Thursday morning. “At the same time, what happened with the economy, the rents didn’t rise like they should have because of the job situation in Raleigh, and we missed a couple of [debt] payments.”

Brier Creek FC has no employees but pays workers provided by Flaherty & Collins Management Inc. to operate and manage the complex. In its bankruptcy filing, Brier Creek is asking to use collateral it has with its bank, First Horizon Home Loans in Irving, Texas, to pay the employees. Payroll expenses total about $46,000 a month.

First Horizon loaned Brier Creek FC $24.8 million to develop the apartment project, according to court documents.

“If debtor is not permitted to use its cash collateral to operate its business and maintain the property securing the Indebtedness, the debtor will have to cease operations,” Wendy Brewer, the attorney for Brier Creek FC, wrote in a court filing.

In exchange for the collateral, Brier Creek FC said it will provide replacement liens to First Horizon and will make monthly payments to the bank equal to the current interest amount of $36,100 month.

Brier Creek filed for bankruptcy reorganization to keep its lender from selling the loan to what Conover referred to as a “hostile group.”

The largest unsecured creditors listed on the bankruptcy filing, Indianapolis-based LC Investors LLC and Flaherty & Collins Development, are owed $3 million and $1.2 million, respectively.

A hearing on Brier Creek FC’s motion to use bank collateral to pay employees is set for 1:30 p.m. Friday.

The filing marks the second time a company operated by Flaherty & Collins’ owners has sought bankruptcy protection in the past six months.

In November, Charlotte FC LLC filed for Chapter 7 bankruptcy liquidation, listing liabilities of $53 million and assets of just $197,492. Charlotte FC had planned to build 48 floors on top of a retail portion of a mixed-use development called EpiCentre.

The unfinished, 53-story condo tower in Charlotte, N.C., with a price tag topping $200 million, would have been the tallest residential building in the Carolinas.

David Flaherty and Jerry Collins founded their business in 1993. Flaherty & Collins manages more than 12,000 apartment units in 10 states. It also has developed nearly two dozen projects, including the $37 million Cosmopolitan on the Canal along the Central Canal downtown.


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. By Mr. Lee's own admission, he basically ran pro-bono ads on the billboard. Paying advertisers didn't want ads on a controversial, ugly billboard that turned off customers. At least one of Mr. Lee's free advertisers dropped out early because they found that Mr. Lee's advertising was having negative impact. So Mr. Lee is disingenous to say the city now owes him for lost revenue. Mr. Lee quickly realized his monstrosity had a dim future and is trying to get the city to bail him out. And that's why the billboard came down so quickly.

  2. Merchants Square is back. The small strip center to the south of 116th is 100% leased, McAlister’s is doing well in the outlot building. The former O’Charleys is leased but is going through permitting with the State and the town of Carmel. Mac Grill is closing all of their Indy locations (not just Merchants) and this will allow for a new restaurant concept to backfill both of their locations. As for the north side of 116th a new dinner movie theater and brewery is under construction to fill most of the vacancy left by Hobby Lobby and Old Navy.

  3. Yes it does have an ethics commission which enforce the law which prohibits 12 specific items. google it

  4. Thanks for reading and replying. If you want to see the differentiation for research, speaking and consulting, check out the spreadsheet I linked to at the bottom of the post; it is broken out exactly that way. I can only include so much detail in a blog post before it becomes something other than a blog post.

  5. 1. There is no allegation of corruption, Marty, to imply otherwise if false. 2. Is the "State Rule" a law? I suspect not. 3. Is Mr. Woodruff obligated via an employment agreement (contractual obligation) to not work with the engineering firm? 4. In many states a right to earn a living will trump non-competes and other contractual obligations, does Mr. Woodruff's personal right to earn a living trump any contractual obligations that might or might not be out there. 5. Lawyers in state government routinely go work for law firms they were formally working with in their regulatory actions. You can see a steady stream to firms like B&D from state government. It would be interesting for IBJ to do a review of current lawyers and find out how their past decisions affected the law firms clients. Since there is a buffer between regulated company and the regulator working for a law firm technically is not in violation of ethics but you have to wonder if decisions were made in favor of certain firms and quid pro quo jobs resulted. Start with the DOI in this review. Very interesting.