Peer Street files Chapter 11 bankruptcy, cites rising interest rates

By Sarah Lizee

Olympia, Wash., June 27 – Peer Street, Inc. filed Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the District of Delaware with plans to sell its assets, according to court documents.

Peer Street, a platform for online investing in real estate debt, said its business was severely impacted by adverse market conditions, including sharp rate increases as part of the Federal Reserve’s effort to curb inflation and control price growth.

The company began reducing its staff in 2022, starting with 281 employees and now down to 28 as of the petition date.

During that time, the debtors also reviewed their vendors and other business relationships, aggressively seeking to renegotiate or cancel contracts to reflect the reductions in staff and reductions in operating requirements.

In July 2022, the debtors retained Kramer Levin Naftalis & Frankel LLP to assist it with potential restructuring options.

In August 2022, Peer Street informed lender Magnetar Financial LLC of potential events of default under a $30 million prepetition convertible secured term loan credit agreement. Magnetar agreed to waive the events of default through Aug. 24, 2022. The waiver has since been extended 33 times.

The company is seeking court approval to use the cash collateral of Magnetar, which the lender has consented to.

In late 2022 and early 2023, some members of the debtors’ board of directors resigned. In mid-April, the company engaged Province to provide a chief restructuring officer and supporting advisory personnel.

In March, the debtors retained Piper Sandler Loan Strategies, LLC to canvass the market for interested buyers. Piper pooled the company’s assets into six groups.

Under the company’s proposed bid procedures, the first-round bid deadline would be 1 p.m. ET on July 25, the second-round bid deadline would be 1 p.m. ET on Sept. 7, and the sale hearing would take place on Sept. 18.

The company is hoping to close the sales by Sept. 22.

In its petition, the company listed 100 to 199 creditors, $50 million to $100 million in assets and $50 million to $100 million in liabilities.

Its four largest unsecured creditors are retail customers whose information has been redacted. The claims range from $4.43 million to $33.92 million. The fifth largest unsecured claimholder is the Small Business Administration, based in Denver, with a $3.78 million SBA paycheck protection program claim.

Young Conaway Stargatt & Taylor LLP and Kramer Levin Naftalis & Frankel are co-bankruptcy counsel to the company.

The El Segundo, Calif.-based company filed bankruptcy under Chapter 11 case number 23-10815.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.