UPDATED JULY 26 at 10:30 a.m.:
After years of steady expansion, a company listed as a dba of KW Advisors, a prominent Santa Monica-headquartered brokerage, has declared Chapter 11 bankruptcy.
R&LS Investments, helmed by Rick Cunningham, filed for voluntary protection from creditors in U.S. Bankruptcy Court’s Central District on July 18. In the filing, the company states it owes less than $7.5 million, but the estimated assets are between $500,000 and $1 million.
Creditors include an LLC linked to real estate investor David Taban. The debt for about $430,800 is contested, according to court documents. Taban’s Jade Enterprises owns a Santa Monica building where Cunningham kept offices. A brokerage linked to Cunningham was said to have vacated the Taban-owned offices in June.
There’s another debt for about $144,800 to City National Bank. There’s also $30,000 owed to a Citi Bank Credit card and around $30,000 owed to CoStar. There’s also smaller debts such as $3,100 to an office cleaning company and $3,000 to a parking lot company.
An attorney representing R&LS Investments responded to an inquiry by saying the “bankruptcy does not affect the KW offices” because the “offices are independently owned.”
Adam Stein-Sapir, a bankruptcy expert at Pioneer Funding Group, said Chapter 11 provides a forum to renegotiate all types of contracts, including leases. Sometimes leases are rejected and the landlord is free to find a new tenant.
“It also goes for bank debts, loans and civil claims. Those debts become frozen the day you file for bankruptcy,” Stein-Sapir said.
The New York-headquartered Stein-Sapir has not worked with KW Advisors and is not acquainted with the specifics of the case.
An undated website for Cunningham’s company The Cunningham Group said the company had 1,720 affiliated agents, and a lifetime combined sales of $1.5 billion. A Department of Real Estate profile of R&LS Investments said there were about 400 agents affiliated with the company.
Cunningham was recruited to Keller Williams in 2004 as the first investor for its Hollywood Hills office. KW Advisors runs offices in Los Angeles’ Westside and Santa Monica. It also maintains offices in San Francisco Bay Area locations such as Napa, Palo Alto, Peninsula Estates and San Francisco. Cunningham owns other brokerages under the Cunningham Group umbrella, according to media reports.
Clarification: Previous story did not include information from the attorney representing R&LS Investments regarding the relationship between KW Advisors and the bankrupt entity.
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