As commercial real estate lender iStar Financial tries to restructure some of its $8.6 billion in debt, it may seek bankruptcy protection, after creditors blocked it from amending loans, company insiders told Bloomberg News. The company expects to meet with creditors next month to discuss a potential “pre-packaged bankruptcy,” which could occur sometime next year. New York-based iStar recently saw its shares plunge more than 25 percent, losing more than 90 percent of their value since 2007. The company, led by CEO Jay Sugarman, hired Lazard, and Kirkland & Ellis to advise them on the debt restructuring. IStar made loans on properties including the nearly complete Paramount Bay condominium on N. Bayshore Drive in Miami. Aside from bankruptcy, iStar is considering a proposal to extend maturities on its debt as well as a potential exchange offer, sources said. [Bloomberg via Crain's]

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The sprawling, overextended empire of Corus Bancshares loans, many of
them in Florida, is attracting interest from major distressed debt
investors. Thomas Barrack, who first made his fortune in the aftermath
of the savings and loan crisis; Barry Sternlicht, the man behind the
Starwood empire; Jay Sugarman of iStar Financial, the public real
estate giant; and New York developer Stephen Ross, sometimes called the
King of Columbus Circle, in league with Lubert-Adler, a big property
investor in Philadelphia, are all mentioned as possible buyers of these
troubled loans and tattered projects. Early this year, federal
regulators ordered Corus to raise capital or put itself up for sale. It
was unable to do either. In late June, the bank reported that its
entire capital base had been wiped out. Auditors Ernst & Young have
walked away, and the stock faces delisting from the Nasdaq exchange. [more]