St. John's Troubles Continue with Chapter 11

St. John's Troubles Continue with Chapter 11
St. John’s Apartments in Little Rock filed for Chapter 11 bankruptcy reorganization last month and listed $8.5 million in debts. (Mark Friedman)

The troubled St. John’s Apartments project in Little Rock is now in Chapter 11 bankruptcy reorganization.

If you recall, David Henry’s Henry Management Inc. of Little Rock managed the 224-unit apartment complex until 2012 when a Pulaski County Circuit Court judge appointed a receiver because Henry Management defaulted on $7.9 million worth of bonds in 2012. Since 2014, Carl Schultz, vice president and co-owner of United Properties Management of Little Rock, has been the receiver for the southwest Little Rock complex.

In the bankruptcy filing, St. John’s showed $8.5 million in debts and $3.03 million in assets.

The largest creditor is the Bank of the Ozarks, which is the bond trustee, and the amount of its claim is $7.7 million.

Schultz said in a bankruptcy filing that the complex also owes United Properties $295,000 for receiver and management fees.

The apartment complex reported it had $818,383 in revenue in 2014 and $373,284 so far this year.

The 173,600-SF property provides low-income housing, but the complex is only 47 percent occupied, Schultz said in a bankruptcy filing.

It is “operating at a negative monthly cash flow rate of approximately $15,000 to $20,000,” he said. “The project is burdened by an unsustainable debt load and is in need of capital for certain liabilities as well as unit repairs and maintenance.”

He said the apartment complex hasn’t made payments on the note securing the bonds for about two and a half years.

Lapis Advisers LP of San Francisco, which owns 52.6 percent of the bonds, has proposed to provide St. John’s money to maintain the property and to file Chapter 11 in order to reorganize or sell the complex, Shultz said.