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After years of steady expansion, the company behind KW Advisors, a prominent Santa Monica-headquartered brokerage, has filed for chapter 11, The Real Deal reported. R&LS Investments, helmed by Rick Cunningham, filed for voluntary protection from creditors and in the filing, the company states that it owes less than $7.5 million, but the estimated assets are between $500,000 and $1 million. Creditors include an LLC linked to real estate investor David Taban. The debt for about $430,800 is contested. Taban’s Jade Enterprises owns a Santa Monica building where Cunningham kept offices. A brokerage linked to Cunningham was said to have vacated the Taban-owned offices in June. There’s another debt for about $144,800 to City National Bank and $30,000 owed to a Citi Bank credit card and around $30,000 owed to CoStar, in addition to smaller debts such as $3,100 to an office cleaning company and $3,000 to a parking lot company. An undated website for Cunningham’s company The Cunningham Group said the company had 1,720 affiliated agents, and a lifetime combined sales of $1.5 billion. Cunningham was recruited to Keller Williams in 2004 as the first investor for its Hollywood Hills office. KW Advisors runs offices in Los Angeles’ Westside and Santa Monica. It also maintains offices in San Francisco Bay Area locations such as Napa, Palo Alto, Peninsula Estates and San Francisco. Cunningham owns other brokerages under the Cunningham Group umbrella.

Hundreds of regular investors who together put up $63 million to buy pieces of Atlanta and Miami commercial real estate have allegedly seen their funds disappear, InvestmentNews reported. Two deals orchestrated by CrowdStreet Inc., a real estate investment company that crowd-sources funds from relatively wealthy individuals, have fallen apart as investors’ money vanished from bank accounts earmarked to buy equity in buildings. An independent manager brought in to look at how the deals went sour found millions of dollars of the crowdfunded cash ended up in accounts owned by Nightingale Properties, a firm CrowdStreet partnered with on the transactions, along with Nightingale’s Chief Executive Officer Elie Schwartz. In order to investigate the accounts, the independent manager put the two legal entities earmarked to buy equity in the Atlanta and Miami buildings in bankruptcy. Nightingale raised funds from accredited investors through CrowdStreet’s online platform. The money was then placed in two shell companies, which Nightingale was supposed to use to buy the properties. The minimum investment from accredited investors was $25,000. While investor interest in the Atlanta Financial Center complex exceeded expectations — garnering 238% more funding than it had set as a goal — financing for the Miami building deal fell short.

BlockFi Inc. executives dismissed repeated warnings from its risk management team about not issuing substantial loans to Sam Bankman-Fried’s Alameda Research that were collateralized with digital tokens created by FTX, BlockFi creditors allege in a newly unsealed report, Bloomberg News reported. The report, prepared by a committee representing BlockFi unsecured creditors, blames the crypto lender’s failure on missteps made by Chief Executive Officer Zac Prince and other senior managers. The creditors’ findings were made public Friday, days after BlockFi released its own investigation contending Prince and other executives had little reason to worry about lending to Alameda before Bankman-Fried’s platform collapsed amid allegations of fraud. The committee said as early as August 2021, BlockFi had a copy of an Alameda balance sheet showing the trading firm relied substantially on FTT, a digital token created by FTX. Alameda’s over-reliance on FTT “set off alarms at BlockFi,” the committee said, but those concerns were dismissed by Prince. The report quotes Prince saying in an email that Alameda represented “the largest/clearest growth opportunity we have.” The FTT token played a major role in FTX’s failure. In early November, industry publication <em>Coindesk</em> reported on the same balance sheet BlockFi had, triggering a public run on FTX that forced Bankman-Fried’s platform into bankruptcy within days, according to the committee’s report. (Subscription required.)

Silicon Valley Bank’s former parent company won court approval to sell its investment-banking business for approximately $100 million, according to court papers, the first sale of a company with ties to the bank since it collapsed in March, WSJ Pro Bankruptcy reported. SVB Securities, the investment-banking arm of parent SVB Financial, was greenlighted to sell the assets to Jeff Leerink, the investment bank’s founder, as well as eight senior managers. The sale is also backed by billionaire Seth Klarman’s Baupost Group, one of the world’s largest hedge-fund firms. MoffettNathanson, an equity research firm affiliated with SVB Securities, won’t be sold as part of the transaction, court papers show. When Silicon Valley Bank collapsed this spring and was taken over by federal regulators, the bank’s parent company SVB Financial filed for chapter 11 protection to ease a sale of its remaining assets. It was the largest bankruptcy filing stemming from a bank failure since Washington Mutual in 2008. SVB Securities was one of the most valuable assets that SVB Financial put up for sale. Silicon Valley Bank failed in March after rising interest rates triggered huge losses on its investments and customers panicked, withdrawing more than $40 billion of deposits in a single day. Regulators decided the bank couldn’t continue to function and stepped in to seize it.

A financial stream that helped fund the world's riskiest companies and grew into a market estimated at $1.5 trillion in the low interest rate years is drying up, as aggressive rate hikes bring tougher borrowing conditions and uncertainty, Reuters reported. The pace of issuance of so-called collateralized loan obligations (CLOs) has stalled. Specialist asset managers minted CLOs worth more than half a trillion dollars in 2021, a year of heavy post-pandemic monetary stimulus. Almost $69 billion worth were launched or refinanced during the first half of this year, down 41% on the same period in 2022, JP Morgan data shows. These vehicles, popular with hedge funds, insurers and asset managers when borrowing costs are low and investors hunt for yield, account for up to 60% of demand for the junk loans rated single B or below, according to S&P Global Ratings. But the market has sputtered just as companies whose debt is considered a speculative investment face a mountain of refinancing needs in coming years. The sharpest rise in global interest rates in decades, an anticipated global recession and fewer new CLOs to support junk rated borrowers potentially create a toxic cocktail of corporate distress. While low now, debt defaults are rising. A restructuring at French retailer Casino and the bankruptcy of U.S. retailer Bed Bath & Beyond expose cracks in business models that were previously insulated by abundant money supply and low rates, analysts said. S&P Global estimates that more than one in 25 U.S. businesses and almost one in 25 European companies will default by March 2024. The CLO market has slowed because investors want higher payouts as compensation for the risk of lending to weaker borrowers.