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HORSHAM, PA-According to reports, Capmark is filing for bankruptcy protection. After filing a $1.6-billion Q2 loss, the commercial real estate lender is seeking for protection under Chapter 11. The lender has $21 billion of debt and $20.1 billion in assets.

The lender had already agreed to sell its North American servicing and mortgage business to a JV of Berkshire Hathaway Inc. and Leucadia National Corp. KKR & Co., Goldman Sachs Capital Partners and Five Mile Capital Partners created Capmark after they purchased the commercial real estate business from GMAC, LLC.

“The Chapter 11 process will give Capmark the opportunity to restructure our balance sheet while continuing to focus on maximizing value for our principal stakeholders,” says Mohsin Meghji, chief restructuring officer of Capmark, in a statement. “Over the past months, Capmark has engaged in extensive and constructive negotiations with our primary creditor constituencies to reach agreement on a plan of restructuring. We expect to complete this effort over the coming months.”

Capmark has struggled with a continually rising default rate. Capmark Bank, the recent recipient of $600 million of new equity from Capmark will not be part of the bankruptcy filing.

Capmark’s subsidiaries filing for Chapter 11 protection include Capmark Finance Inc.; Capmark Capital Inc.; Capmark Equity Investments, Inc.; Mortgage Investments, LLC; Net Lease Acquisition LLC; SJM Cap, LLC; Capmark Affordable Equity Holdings Inc.; Capmark REO Holding LLC; Summit Crest Ventures, LLC; Capmark Affordable Equity Inc. and 33 other Low Income Housing Tax Credit entities.

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