After coliving company Common took over San Francisco-based startup Starcity, three corporate entities associated with Starcity have filed for Chapter 7 bankruptcy.
Starcity Properties Inc, the largest of the three entities, had assets worth $3.2 million and $9.9 million in liabilities, with $5.6 million of those liabilities being secured by claims tied to property.
“The purpose of filing the Starcity entities together was so that it could be liquidated in an orderly fashion by a single trustee,” said Wendy W. Smith, partner at the firm Binder & Malter LLP, which is representing the Starcity affiliates. “That trustee will examine whether under the rules of the bankruptcy code, there is enough value in the assets in light of the creditors to justify selling the various interests in developments and properties.”
The filings came just after it was reported that Starcity’s coliving project in downtown San Jose, which would have become the largest coliving building in the world, would not be part of the assets sold and became delinquent on a $14.7 million loan from 2019.
Last June, Starcity transferred property management agreements in relation to 7,500 units to Common. After this, Common hired new employees including Starcity cofounder and former CEO Jon Dishotsky, but as of this week, Dishotsky said he is no longer employed at Common.