The FINANCIAL -- Capmark Financial Group Inc., one of the largest commercial real-estate lenders in the U.S., filed for bankruptcy protection on October 25 after sustaining heavy losses in the troubled real estate market. The company posted a second-quarter loss of about $1.6 billion.

Capmark, which was created in March of 2006 through a leveraged buyout of the commercial real estate assets of General Motors' finance arm GMAC, had said earlier this year that it might file for bankruptcy, according to Reuters. The company said in a statement the move was due to conditions in the financial and commercial real estate markets and a lack of available capital.

Capmark has been hurt by rising losses on mortgage loans, and has had to foreclose on properties such as the Equitable Building in Atlanta because borrowers were not able to make loan payments, AP reported. In its Chapter 11 filing Sunday in Delaware bankruptcy court, the company listed total debt of $21 billion and assets of $20.1 billion. It seeks to reorganize under court protection, reducing its debt while continuing to operate its businesses.

According to the filed court documents, Capmark and its units owe $7.1 billion to the 30 largest creditors, without collateral backing their claims, Bloomberg wrote.

The three biggest are Citibank N.A., as administrative agent under the $5.5 billion credit agreement, with a claim of $4.6 billion, according to the same source. Deutsche Bank Trust Company Americas, as trustee for the 5.875 percent senior notes and the floating senior notes due 2010, with claims of $1.2 billion and $637.5 million, respectively; and Wilmington Trust FSB, as successor trustee for the 6.3 percent senior notes due 2017, with a claim of $500 million, according to court papers.

Many U.S. banks and real estate investment trusts have been hurt by increasing losses on commercial real estate loans, AP informs. With millions of jobs lost and office space remaining empty during the recession, developers have been forced to default on loans. Analysts predict that commercial real estate defaults will rise rapidly.

"We view this reorganization process as an unfortunate but necessary response to recent unprecedented conditions in financial and commercial real estate markets, which presented a significant challenge for Capmark and similarly situated finance companies," said Capmark President and CEO Jay Levine, in a statement, according to the same source. "By constraining the availability of capital, these difficult market conditions had a negative effect on all our core businesses."

Capmark had recently reported a second-quarter loss of $1.6 billion, Market Watch wrote. The company said its Capmark Bank unit is not included in the filing, nor are Capmark Investments LP, Capmark Securities Inc. and Capmark's Asian, Indian and European subsidiaries.

Subsidiaries filing for Chapter 11 protection included Capmark Finance Inc., Capmark Capital Inc., Capmark Equity Investments Inc., Mortgage Investments LLC, Net Lease Acquisition LLC, SJM Cap LLC, Capmark Affordable Equity Holdings Inc., Capmark REO Holding LLC, Summit Crest Ventures LLC, Capmark Affordable Equity Inc. and 33 other low-income housing tax credit entities, the statement said, according to the same source.

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