The economic crisis and sharp decline in the commercial real estate market have whacked $73 million off developer George Broadbent's net worth, according to a court filing unsealed this week after he lost a legal battle to keep his financials private.
As of January 2007, Broadbent, co-founder of The Broadbent Co., had net worth of $121 million, and his shopping centers had equity of $62 million, according to the newly public filing. As of July, his net worth had fallen to $48 million, and the equity in his real estate projects had shrunk to $10 million.
On top of that, his cash in personal accounts plummeted from about $7 million to just $3,000, though he continues to have annual expenses of more than $1 million.
The spat over whether Broadbent could keep his finances under wraps was an outgrowth of a legal battle with The Huntington National Bank and PNC Bank, which have argued for months that a "material adverse change" in his personal financial condition allowed them to declare a default on a $21 million loan The Broadbent Co. received in 2006 for its Greenwood Place shopping center. George Broadbent personally guaranteed $4.9 million of that debt.
That litigation was settled Saturday, two days before a two-day trial was set to begin. Terms were not disclosed. Richard Kempf, a partner at Taft Stettinius & Hollister representing Broadbent, would not comment in detail but said he was happy with the agreement. Attorneys for the banks did not return calls.
George Broadbent, 70, and his company over the past three years have become ensnared in more than a half-dozen lawsuits with lenders. Courts already have ordered George Broadbent to pay PNC and Huntington $17 million, and he likely soon will face an additional $5.75 million in judgments stemming from loans the company used in 2007 to redevelop the building at 117 E. Washington St. into its corporate headquarters.
“For reasons that remain somewhat unclear, Mr. Broadbent has failed to satisfy any of the $17 million in judgments entered against him,” Tanya Walton Pratt, the judge who oversaw the Greenwood Place litigation, wrote in July.
Walton Pratt laid out George Broadbent's financial condition in that July filing, but kept it under seal. However, on March 2 she ordered it unsealed, citing Seventh Circuit precedent toward keeping records open. On Monday, Broadbent's attorneys proposed that the court instead unseal a redacted version, but Walton Pratt rejected that request Tuesday.
“To be sure, Mr. Broadbent has understandable personal reasons for seeking to keep this information private,” she wrote. “That said, potential embarrassment to a stakeholder in a lawsuit does not warrant maintaining information under seal.”
Broadbent's dispute with Huntington and PNC began in August 2009, when his company sued them, charging they were wrongly attempting to restrict the company's access to a $50 million credit line.
The banks loaned The Broadbent Co. $21 million for the Greenwood Place development in May 2006. It was scheduled to come due in three years, but the lenders later extended it to May 2014.
Huntington and PNC countersued The Broadbent Co. in August 2010, seeking to collect the entire loan balance early, citing his declining financial condition.
Their counterclaim might have been triggered by Broadbent’s move a few months earlier to sell The Broadbent Co. to his wife, Mary Clare Broadbent, for $50,000 as the mounting lawsuits threatened his control over the company.
As lenders circled, Broadbent also transferred to her his ownership interests in five retail properties that had equity of more than $22 million for what he said in an affidavit were “estate planning reasons.” He also sold to her his ownership interest in nine other properties for $150,000 to “raise personal capital” and “diversify his portfolio,” court records show.
Broadbent said in the affidavit that the transfers were not designed to “hinder, delay or defraud” his creditors.
But Judge Walton Pratt wrote in court documents that “since 2010, Mr. Broadbent has engaged in a series of financial transactions with his wife that have raised red flags for lenders.”
The Broadbent Co., founded in 1972, manages more than 3 million square feet of retail space, mostly in central Indiana.