A regional development company of Opus Corp. is emerging from bankruptcy and is suing its Minnetonka-based parent on the way out.
Opus West, which is based in Phoenix, claims Opus Corp. improperly siphoned millions of dollars from the regional operation, eventually driving it into bankruptcy.
The suit filed last week in U. S. District Court in Dallas seeks more than $163 million that could help pay Opus West's unsecured creditors that are owed $1.1 billion, according to bankruptcy court filings. Opus West was formed in 1979 and had developed almost 53 million square feet of commercial space when it filed for bankruptcy last year, with total debt of about $1.5 billion.
Officials of Opus Corp., which itself is in the process of shutting down, could not be reached for comment Monday.
Opus West was one of three regional operating companies that filed for bankruptcy last year. The others are Atlanta-based Opus South and Washington, D.C.-based Opus East. At the time, Opus Corp. said all its operating companies -- including Opus North in Chicago and Opus Northwest in Minnetonka -- were independent operations.
Opus West's suit paints a different picture. It says the parent company exercised "dominant control over ... functions and operated Opus West as an insufficiently capitalized facade for Opus Parent's dealings."
Among other things, Opus West was required to pay dividends, distributions from its pretax net income and payments to the parent company for charitable contributions. Included in the $163 million Opus West is seeking is almost $25 million in payments for charitable contributions, $121.3 million in distributions and $17.2 million in excess dividend payments.
The suit also said that Opus Corp. improperly took control of its regional operating companies' property management businesses. Opus West said it was paid a nominal fee.
Opus Corp. sold the combined property management operations to Bloomington-based NorthMarq Real Estate Services last year for a substantial profit that was not shared with Opus West or the other regional operating companies, the suit said.
When the commercial real estate market crashed, Opus Corp. reneged on a promise to provide Opus West with funding, leaving it insolvent and with no choice but to file for bankruptcy, the suit said.
Opus West's bankruptcy plan that received court approval last week said it will fully satisfy secured debtholders by offering those creditors the collateral securing their claims. Unsecured creditors appear less likely to recoup all that they are owed.
Susan Feyder • 612-673-1723