You can expect that some of Frontdesk’s rivals will move in to buy some of its remains.
Frontdesk, the Milwaukee-based property management company that fired its staff of more than 100 last week, filed for receivership, a bankruptcy alternative in Wisconsin, on January 5, according to a published report.
This means that the company’s assets, presumably including its tech stack and contracts with short-term rental property owners, will likely be up for sale.
In a shareholder letter obtained by a couple of Wisconsin business publications, Frontdesk CEO Jesse DePinto stated: “We expect that the receiver will run a marketing and sale process with the goal of having a competitive bidding process that will take place over the next few months. At this stage, we do not know whether the process will result in any potential distribution to shareholders.”
Frontdesk, which was founded in 2017, itself took on the property management contracts of several rivals when they went bust during the pandemic. For example, in 2020, Frontdesk assumed contracts for 55 units when Stay Alfred ceased operations.
Frontdesk managed properties, including in multifamily buildings, in 30 U.S. markets, including many in the southern and midwest portions of the U.S.
Frontdesk reportedly had $14.6 million in liabilities as of November 30 and $659,000 in assets.
The largest creditor was SWEL2 LLC, with William E. La Macchia listed as a principal, at $6.3 million. Frontdesk board member La Macchia founded a renowned tour operator, The Mark Travel Corp., which Apple Leisure Group acquired in 2018. Another prominent investor is Marc Lasry, former co-owner of the Milwaukee Bucks NBA team.
Frontdesk owed $5.7 million in long-term debt, $1.4 million in current liabilities, and $657,000 in payroll and taxes, among other debts, according to WisconsinInno.
In a LinkedIn post Wednesday, DePinto blamed the company’s demise on market conditions.
“Despite valiant efforts from the entire team, the market headwinds were simply too strong to make the model work profitably at scale,” he wrote.