Sacramento Area Developer Files for Chapter 7 Bankruptcy
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Sacramento-Area Developer Files for Chapter 7 Bankruptcy

February 13, 2012


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The Sacramento Bee reports that Sotiris Kolokotronis, a developer known locally for several developments in downtown Sacramento, has filed for Chapter 7 bankruptcy protection with $3.2 million in assets and $136 million in debts. Sources note that, while some of Kolokotronis’s buildings have gone into default in recent years, the primary trigger for his filing was a $17 million loan for a housing project that never came to fruition.

After Kolokotronis defaulted, it seems a so-called vulture fund (Gray1 CPB) from San Diego acquired the $17 million loan and brought a judgment for $16.5 million of it against the developer. In lieu of payment, the Gray1 reportedly attempted to foreclose on three separate properties Kolokotronis had developed in recent years.

Kolokotronis’s bankruptcy lawyer apparently reported that his client had reached a settlement deal with Gray1, but that the latter backed out before it could be completed. The bankruptcy attorney openly criticized Gray1 for failing to compromise with Kolokotronis and for choosing legal action over out-of-court loan renegotiation.

Debt Discharge & New Projects?

The Chapter 7 bankruptcy filing will put a hold on Kolokotronis’s debt-related lawsuit, allowing the bankruptcy court to determine what kind of repayment Gray1 will receive. As bankruptcy’s automatic stay takes effect, all collection actions against Kolokotronis will halt, and the court will begin the process of evaluating his assets.

The developer listed $3.1 million in assets, which suggests that the court might liquidate some of them to raise money to repay Gray1 and other possible creditors. Because he filed under Chapter 7 of the U.S. Bankruptcy Code, though, Kolokotronis will not have to adhere to a three- to five-year repayment plan (as he would under Chapter 13).

Sources indicate that Kolokotronis chose Chapter 7 bankruptcy in part because it moves quickly and will allow him to emerge and undertake new business ventures in a relatively short period of time. Because of his established reputation as a developer in Sacramento, Kolokotronis may find it easier to obtain loans following his bankruptcy discharge than other filers; however, it is likely that he will still face higher interest rates on any loans he does receive.

Interestingly, Kolokotronis is married to Matina Kolokotronis, who is President of Business Operations for the Sacramento Kings, the city’s professional basketball team. Reports indicate, however, that the couple is legally separated, and that the bankruptcy petition was filed singly, not jointly.

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