Thursday, September 2, 2010

Parent of Pitcairn Properties files for Chapter 11

"The parent company of Pitcairn Properties filed for bankruptcy Wednesday, a move that will buy the Jenkintown real estate firm time to stave off a takeover attempt by an unhappy investor.

Pitcairn Properties Holdings Inc. filed for Chapter 11 protection in U.S. Bankruptcy Court in Delaware.

In a statement, company chief executive officer Salah A. Mekkawy described the filing as a "legal move to implement a fair and rational framework to restructure, but not reduce, the company's debt and capital structure."

The company listed $10 million to $50 million in debts. The company said it had about $800 million in real estate holdings.

Among PPH's largest outstanding debts is $7.56 million in dividends owed to an investment firm that has sued for payment.

The firm, PPH Investments L.L.C., is owned by Eric L. Blum. Blum, through his firm, has $50 million invested in Pitcairn. In his suit seeking payment, Blum contends that his investment agreement gives him the right to appoint a majority of Pitcairn's board. He is demanding to do so.

Pitcairn Properties has countersued, contending that Blum's demands would unfairly wipe out other Pitcairn stockholders and force the liquidation of $800 million in real estate at the worst possible time.

Jim Matour, Pitcairn's bankruptcy attorney, said Pitcairn was still a viable company, but one with the vast majority of its assets tied up in real estate and thus not liquid. Bankruptcy will permit Pitcairn the time to free assets to settle the debt to Blum.

Matour said he expected the company to file a reorganization plan this week.

"It is important to know that this filing has no impact on the day-to-day operations of the company," he said.

Said Mekkawy: "We look forward to a bright future and want to reassure our partners and investors that we expect to emerge promptly from reorganization pursuant to a plan that protects the value of the company even as it honors the obligations to all of its creditors."

Pitcairn Properties has roots in a fortune created by John Pitcairn, a 19th-century Scottish-born American industrialist who founded Pittsburgh Plate Glass Co., which later was known as PPG.

There are about 600 living descendants of John Pitcairn. About half have a combined $1 billion in the wealth manager Pitcairn Trust Co., which is unrelated to Pitcairn Properties.

Pitcairn Properties was created in 1968 to diversify the family wealth.

Among its holdings are 6 Penn Center in Philadelphia, the Eagleview Corporate Center in Exton, and Chesterbrook and Glenhardie corporate centers in Wayne."

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