Episodes in the saga of StoryBuilt’s downfall keep trickling out.
The Austin-based residential developer is accused of misusing funds earmarked for specific projects, in a recent status report from its court-appointed receiver, Los Angeles-based Stapleton Group, the Austin Business Journal reported.
StoryBuilt, in voluntary receivership due to a financial meltdown, has been grappling with layoffs and lawsuits from investors and condo owners. And earlier this week, StoryBuilt put its entire development portfolio, which includes properties in Austin, Dallas, Seattle and Denver, on the market with an estimated value of $2 billion.
The status report, submitted in a Travis County civil court, sheds light on potential causes of StoryBuilt’s turmoil. Stapleton Group found that StoryBuilt did not adhere to standard accounting practices. Funds allocated for specific projects might have been redirected to other endeavors, used for excessive fees or miscellaneous expenses, the report said. The commingling of assets and liabilities is under investigation through forensic accounting.
Proceeds from the 28-property portfolio sale will be used to cover secured debt obligations and expenses during the ongoing forensic analysis, the court filing states.
The receivership was necessitated by StoryBuilt’s financial strain, resulting in an inability to meet debt service payments, payroll and business operations. In recent months, the company underwent furloughs, major leadership changes and significant layoffs. Lawsuits from investors and condo owners in East Austin further exacerbated its woes.
At the time of the receiver’s appointment, approximately 25 foreclosures and lawsuits were pending against StoryBuilt or its affiliates, the outlet reported. All legal actions have been suspended according to the receivership order, providing a temporary respite for the troubled developer.
—Quinn Donoghue
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