Evergreen Solar, now bankrupt, completed construction of a state-of-the-art manufacturing facility in Devens, Massachusetts in 2010 for $196,000,000. In 2012, Massachusetts based investors Calare Properties and its partner bought it for $8,330,000. In Calare’s case, the adage that persistence pays rings true.
In August 2011, Evergreen filed for Chapter 11 bankruptcy. Two months later, Calare found itself as the only bidder for the company’s real estate assets. Their initial bid was denied. But while Calare continued to move in, others moved away. The complexity of the bankruptcy, coupled with the legal issues relative to Evergreen’s 30 year ground lease with the Commonwealth, precluded other investors from realizing the play’s true value. After the estate unsuccessfully attempted to locate a buyer to outbid Calare, it finally agreed to sell the property to Calare for $8,330,000 with the expectation that the fee interest would be purchased from the Commonwealth.
Nearly eighteen months have passed since Calare’s play on Evergreen and the firm is already reaping the rewards. As of November 5, the 400,000 SF facility is completely rented, with the space divided between two large commercial tenants.
Although the rate of corporate bankruptcies continues to slow, savvy investors and developers should keep a watchful eye on the bankruptcy docket. Bankruptcy Code Section 363 permits a debtor to quickly sell its assets free and clear of liens and encumbrances as an alternative to disposing of those assets through a chapter 11 plan of reorganization. Section 363 sales can present ripe opportunities for investors to swoop up valuable assets at fire sale prices.