Real-estate startup Knotel has decided to file voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in Delaware district court, aiming to accelerate the reorganization of the company’s real-estate footprint and capital structure as it agrees to be taken over by major commercial real estate advisory firm Newmark Group Inc.
Knotel, a New York-based international platform that offers real estate services, has been struggling over the past year due to the government’s mandate that employees must remain at home to avoid the unwanted spread of COVID-19 infection.
On Sunday, the company filed for bankruptcy to reorganize its U.S. footprint and to get the sales going again.
According to Knotel, it has agreed to sell its business to an affiliate of Newmark Group Inc. as part of its strategic plan.
“After a thorough review of strategic alternatives, we have determined that a process to sell our business and reshape our U.S. footprint is the best path forward to maximize value for our stakeholders,” said Amol Sarva, the co-founder and CEO of Knotel.
“The pandemic created a uniquely challenging operating environment, with significant impacts on leasing velocity and the rate of renewals in key markets, particularly New York and San Francisco. We must address this now to position our business for sustainable growth and a successful future.”
The company has acquired a commitment for debtor-in-possession (DIP) financing from Newmark’s affiliate of about $20 million in cash.
Newmark Chief Executive Officer Barry Gosin said the firm would support Knotel during the transitional period as it prepares for the new ownership of Newmark.
“We are providing capital to Knotel so it can rightsize its business for the path forward,” said Gosin.
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