Minion & Sherman
Call Us Today for a Free Confidential Consultation

Shopping center failure leads to personal bankruptcy for developer

Bankruptcy proceedings have had their impact on shopping center development over the past five years. The crumbling of the mortgage markets, together with the recession and the threat of another one, has placed some investors in precarious positions.

The scenarios played out in New Jersey and throughout the country share common plot lines. While there are many variations on the same theme, in the end the developer runs out of money before the project is completed and bankruptcy becomes an important option.

Often the developer obtains an initial loan to purchase the property and begin construction. When things do not go according to plan, other construction loan financing is sought to both complete the project and continue paying the interest on the other loan. If the developer needs further financing or seeks to refinance an existing loan, he or she may well find a lender refuses because the property has declined in value despite any improvements made. If that happens, the money to pay the loans is not available and the entire project is in jeopardy.

In Wisconsin, a developer has just filed for personal bankruptcy because of similar problems. He had sought to develop a shopping center for which he initially obtained a $19 million loan, which he personally guaranteed. Though the development attracted anchor stores, neighbors continued to object and environmental issues added to costs. A separate construction loan for the project then became due and financing could not be obtained to pay off the loan because the overall development had declined in value to $16 million.

Without the ability to pay off the maturing construction loan, the developer defaulted on the $19 million loan. Absent further financing and due to his personal guarantee, there was not much left to do but file for bankruptcy. Obviously these are complicated and far-reaching financial transactions that affect more than the shopping center. In New Jersey, an attorney intent on assisting individuals and companies face financial crises and devise a plan for a fresh financial start may provide much needed assistance.

Source: The Milwaukee Journal Sentinel, "Developer Carstensen files for personal bankruptcy," Tom Daykin, Sept. 14, 2011

No Comments

Leave a comment
Comment Information


At the law offices of Minion & Sherman, our New Jersey bankruptcy attorneys have been providing families with real solutions for more than 20 years.

Email Us For A Response

Contact Us Today for a Free Consultation

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

West Caldwell Office
33 Clinton Road
Suite 105
West Caldwell, NJ 07006

Toll Free: 866-915-1839
Phone: 973-559-5791
Fax: 973-882-0856
Map & Directions

Newark Office
201 Washington Street
Newark, NJ 07102

Toll Free: 866-915-1839
Phone: 973-559-5791
Fax: 973-882-0856
Map & Directions