Another property belonging to Texas businessman Nate Paul has filed for bankruptcy protection. Arboretum Crossings, a shopping center in northwest Austin, Texas, filed on July 6, making it at least the 26th bankruptcy for Paul’s real estate holding company, World Class Holdings.
Once the subject of fawning Forbes articles and the owner of a company worth $1.2 billion in assets, Nate Paul has watched his real estate empire implode over the past five years. World Class Holdings, which at one point held 10 million square feet of commercial real estate, has been the subject of dozens of bankruptcies, foreclosures, and mechanics liens.
World Class Holdings purchased Arboretum Crossings in 2019, according to bankruptcy documents. Listed creditors include Cupertino Builders for $103,927.55 in unsecured claims, West Texas Stone Solutions for $69,650.88, and the City of Austin for $12,901.06. Arboretum Crossings’ assets and liabilities are both estimated at between $10 million and $50 million.
Chapter 11 bankruptcy helps the debtor adjust assets and liabilities while avoiding a full liquidation of assets. Also known as “reorganization bankruptcy,” it is one of the most complex and expensive forms of bankruptcy. The debtor must file a petition in court that lists all creditors and a plan of reorganization.
World Class Holdings faces lawsuits, angry lenders, and the FBI
Paul founded World Class Holdings in 2007. The company capitalized on the low cost of real estate properties during the recession, buying popular shopping centers across Central Texas. World Class began purchasing storage facilities, office spaces, and retail property across the country. A decade after its launch, the firm had offices in Texas, California, and New York, and its assets ballooned to over $1.2 billion. World Class Holdings’ glory days would be short-lived.
On August 16, 2019, agents from the Federal Bureau of Investigation and the Department of the Treasury raided Paul’s home and several of his offices in Austin. According to the Austin-American Statesman article, the FBI spokeswoman would not comment on the nature of the raid, but it signaled a sea change for Paul’s public perception within the Austin business community and his firm’s ability to stay ahead of mounting lawsuits and bankruptcies.
By that time, the Statesman article reported, Paul was settling two lawsuits out of court, one from employees of a swanky downtown rooftop bar World Class owned. The plaintiffs claimed that Paul had cheated them out of their tip money. The other lawsuit came from Texas businessman Michael Macs. Mac took Paul to court for fraud, misrepresentation, and breach of trust concerning a $15 million real estate investment in Texas, California, and Indiana.
Meanwhile, mechanics liens were piling up. In Austin’s Travis County, contractors filed 21 liens between 2013 and 2019 against World Class for a combined $1.7 million they said World Class owed them, according to the Austin Business Journal.
In February 2020, Paul halted foreclosure proceedings on eight of his properties by filing for Chapter 11 bankruptcy protection eight times — once for each defaulted property. The Statesman discovered that lenders had been trying for a year to foreclose on defaulted loans worth a total of $258 million. World Class Holdings had filed bankruptcy for 20 entities in 2020 alone, often escaping the foreclosure process by a single day.
Paul catches heat for political dealings
In October 2020, The Houston Chronicle reported on a criminal complaint against Texas Attorney General Ken Paxton. This complaint, filed by seven of his senior aides, accused Paxton of bribery and abuse of office in connection to his dealings with Paul. Paxton — whose 2018 reelection campaign had received a $25,000 donation from Paul — appointed a prosecutor to investigate Paul’s adversaries, according to the complaint.
The firm’s last-minute luck escaping foreclosure was beginning to run out. In December 2020, one lender whom World Class owed almost $22 million acquired several properties in a foreclosure sale.
Soon after, Travis County put a halt on foreclosure proceedings from December 15, 2020, to April 21, 2021 due to the pandemic. Once foreclosures resumed, however, World Class lost one property after another. By June 2021, nine World Class properties were foreclosed on for a combined loss of $138.1 million.
In an email, Paul told the Statesman that he would contest the “unlawful” sales and also that he is “being victimized by unethical adversaries.”