After nearly a year of investor battles, forensic accounting and investigations, the StoryBuilt receivership is starting to wind down.
The process of paying back investors in the failed Austin developer will still take years, but in his most recent report, StoryBuilt receiver Mike Bergthold said he is “winding down the first phase of the assignment.” In that stage, the receivership has tried to sell off StoryBuilt’s real estate portfolio — which it once valued at $2 billion — finish building some of the single-family homes in its pipeline, and sort through the company’s books.
Bergthold’s operation has also filed a lawsuit against StoryBuilt’s former principals, Anthony Siela, Ryan Diepenbrock and Chad Shepler. In the suit, the receiver accused them of “egregious mismanagement” and misuse of investor funds. The principals have denied all charges. They “sincerely hope the receivership allows for the time needed to fully realize the equity interest in each of the joint ventures for the long-term benefit of Storybuilt’s stakeholders,” according to a statement from the former principals. They pointed out that a “vast majority” of the company’s developments were held in joint ventures with four institutional firms.
The receivership still controls a handful of properties and joint-venture stakes. In recent months, it has let some go to foreclosure, not seeing a path to profitability on them, while trying to sell off or finish construction at others.
In February and March, it agreed to foreclosures on the commercial segment of its Frank development at 900 South First Street in Austin, as well as homes serving as collateral on loans from Service Lloyds Bank, Susser Bank and CrossFirst Bank Loans.
Next, it plans to file its recommended plan to distribute the money it recovers from the property sales to the company’s creditors. By the end of March, some 1,216 claims had been filed.
Of the remaining projects with secured creditors, the receiver sees outs for several. It has already filed a motion with the court to sell Charley, located at 1907 Webberville Road in Austin, and expects to earn “several million dollars” at closing. It has also restarted home construction at two other Austin detached-home developments: Lucy, located at 3412 Pennsylvania Avenue, and North Bluff, at 813 North Bluff Drive.
Jolene, at 507 West Commerce Street in Dallas, was projected to consist of 800 apartments, condos and townhomes, along with 65,000 square feet of commercial space. It has $46.1 million of secured debt, according to the report.
The receivership has begun to wind down after a significant strategy shift this year. After struggling to find full-portfolio or going-concern buyers last year, it determined that the investors and company representatives with whom it met at the start of the process gave it “wildly optimistic opinions and information” about the value of the company and its holdings.
Since then, it has been moving to sell off projects individually, as quickly as possible. It’s still negotiating with joint-venture partners, weighing whether to see projects out to completion or sell stakes to third-parties or partners.
The second phase, during which the receiver will oversee remaining JV projects and fund distribution, is expected to last two to three years, according to the report.
Once the assets are liquidated, there are still the investigations. The receiver reports cooperating with the following state and federal agencies: the Federal Bureau of Investigation, the Texas Comptroller of Public Accounts, the Texas State Securities Board, the Internal Revenue Service, the U.S. Securities and Exchange Commission, the US Department of Labor, the State of Washington Labor and Industries and the Texas Labor Board.
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