Greylock Capital Says It’s Really a Small Business in Bankruptcy

(Bloomberg) -- Greylock Capital Management says it's really nothing more than a small business that should be allowed to use special bankruptcy rules to quickly cancel a lease on its expensive, midtown Manhattan office space.

At a court hearing Tuesday morning, attorney Jeffrey Chubak argued that the company qualifies as a so-called Subchapter V debtor because only its affiliates owe hundreds of millions of dollars, not Greylock Capital Associates, the entity that filed for bankruptcy Jan. 31.

Once Greylock finishes deconsolidating its balance sheet, Associates will be under the maximum debt limit of about $7 million, Chubak told U.S. Bankruptcy Judge Robert Drain, who has handled some of the biggest, most complicated bankruptcies filed in the U.S., including Purdue Pharma and Sears.

“Obviously I don't want this case to proceed in Subchapter V if you're over the debt limit,” Drain said.

Assuming Greylock can show the debt is low enough, Drain said he would be open to quickly considering cancellation of the office lease since the company has already moved out.

Read more: For Shrinking Greylock, a $100,000-a-Month Rent Proved Too Much

After that contract is gone, Greylock will be able to file a reorganization plan that pays all creditors in full, Chubak said.

Greylock, founded in 2004, is one of the best known hedge funds in emerging markets investing; within two months its assets under management will be around $350 million, down from about $1.1 billion at the end of 2017, according to court papers.

The company filed bankruptcy after investors pulled their money following three years of losses, most recently stemming from the pandemic.

The case is Greylock Capital Associates LLC, 21-22063, U.S. Bankruptcy Court, Southern District of New York

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