Springfield landlord's bankruptcy case calls for major business plan overhaul
We are continuing to follow a Springfield landlord's bankruptcy case.
Chris Gatley manages 417 Rentals and hundreds of properties around town.
If he cannot come up with a re-organization plan, his business could shut down.
Monday morning, a federal judge heard from Chris Gatley's lawyer and the long list of 417 Rentals' creditors about the progress they've made in resolving the bankruptcy case.
"That's the nature of city government. A lot of eyes are on us. A lot of the creditors are interested in seeing what the city is doing too. If we can keep the properties at a high value by keeping them clean, safe and habitable, then the creditors also benefit from that because their collateral is better," said Springfield Assistant City Attorney, Duke McDonald.
Gatley's debt is substantial. Court documents say he is responsible for 565 rental properties in Springfield and owes money to at least 15 lenders.
"Usually the bankruptcy code has what is called an automatic stay, which means that it says to all creditors carrying on collection activity you have to stop," said McDonald.
Procedure calls for creditors to wait for the court to sort out the details of the Chapter 11 bankruptcy. However, this is no ordinary case.
"That automatic stay does not apply to municipalities that are trying to make their community safe. In terms of dangerous buildings. In terms of nuisance abatement. In terms of trashed out properties. In terms of overgrowth, where a yard looks like a jungle and drives down the property values of a neighborhood. The bankruptcy code itself allows municipalities, counties and cities not be bound by the automatic stay and try to make properties safe and neighborhoods safe and clean and livable for citizens," explained McDonald.
Nearly two dozen of Gatley's properties are in foreclosure. Deeds for another 30 are set to go back to the bank that owns the properties. That leaves a little more than 500 that will need to be rehabilitated so that they meet city codes.
"If we can work with him and get 417 to the point where it's going to ensure the safety of our citizens that we'll meet our objectives," said McDonald.
We spoke with Gatley's attorney, Ron Weiss. He said he is still negotiating with all of the lenders. The end goal is to unload a lot of the properties that aren't profitable and reduce the amount rentals Gatley has to manage.
In three weeks, Weiss will submit a new business plan to the court on how 417 Rentals plans to run their business once the bankruptcy case is resolved.