Just because a Californian rakes in a momentous income, he or she is not necessarily clear of needing to file for bankruptcy.
Last month, Sacramento real estate developer Sotiris Kolokotronis filed for Chapter 7 personal bankruptcy protection with debts surpassing $130 million.
Kolokotronis, like many other Californian developers, used his own assets to guarantee the successful completion of commercial real estate projects, which is commonly referred to as "recourse." He made a considerable number of recourse loans throughout his career, but after one particular failed development, he was forced to file for bankruptcy.
Kolokotronis took out a loan to fund a development called Sheldon Terrace, but the project was never completed, according to the Sacramento Business Journal. Though he had been keeping up with his payments on that loan, Central Pacific Bank put it into default after the property value became less than the loan balance.
San Diego-based investment fund Gray1 CPB, LLC purchased the loan from Kolokotronis' bank, and after winning a $16.5 million judgement against him, the company claimed and auctioned off a number of his interests in developments, according to the media outlet.
Kolokotronis said that he came to an agreement with Gray1 last year to resolve the judgement, but the company backed off, forcing him to file for bankruptcy.
"Mr. Kolokotronis took this action only after exhausting every other alternative," Kolokotronis' bankruptcy lawyer Walter Dahl said in a statement. "This filing is about an aggressive creditor being unwilling to compromise. Our experience has been that most banks and other lenders have worked with their real estate developer borrowers to restructure loans rather than race to the courthouse."
According to the news source, Kolokotronis claimed $3.2 million in assets, but has only $87 in his checking account and 500 euros in a foreign bank account.
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