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NEW YORK CITY-Five years and $234 million dollars after it opened for business, Frontline Capital Group declared bankruptcy Wednesday. But unlike most venture capital firms, Frontline was a borrower as well as a lender, so it is now faced with repaying a hefty startup loan. The firm’s signature investment, HQ Global Holdings Inc., pulled a Chapter 11 three months ago.

According to a report in the Daily Deal, Frontline secured a $183-million startup loan from Reckson Operating Partnership LP, an affiliate of locally based REIT Reckson Associates. HQ Global’s turnkey office business then became the centerpiece in a series of complementary businesses staked by Frontline.

The unconventional strategy seemed just crazy enough to work as the dot-com craze spun out of control. But once the fever broke and “online” frequently became “on unemployment,” HQ Global felt the pinch just as hard as its imploding tenant base.

Unlike traditional VC firms that take the southern route, Frontline couldn’t just fold its hand and leave the table. The company reportedly went into bankruptcy owing $234 million, leaving it with no means of paying off Reckson. Though Frontline is hoping to reorganize, industry observers are skeptical.

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