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US developers starting to feel the pinch as high end firm files for bankruptcy

The New York based developer which has multifamily projects for rent and sale in the North East of the country as well as Florida, Texas and Tennessee, said the move is aimed at enabling the business to be reorganized.

The firm said that it will seek additional outside financing and a new investor and stressed that it has adequate current liquidity and that the filing is not expected to impact the daily operations of the management subsidiary, Tarragon Management or the operation of the rental apartment properties in Tarragon's Investment Division.

Tarragon said it has received a commitment for debtor-in-possession financing from an affiliate of ARKO Holdings, an Israeli company.

Tarragon Chief Executive William Friedman said the decision to restructure was made in the face of the tough real estate sector and tight credit markets.

'Based on the discussions we have had with our unsecured note holders and the financial support of ARKO, we expect that we will be able to structure a consensual plan with our creditors structured to enable Tarragon to preserve the value of its property management and development platforms and maximize any return to creditors,' he said.

The company's projects are at the high end of the property market. It has a 15-story condo project in Edgewater, New Jersey where apartments cost between $595,880 for a one bedroom up to $1.6 million for a three bedroom.

Apartments at Tarragon's condo project in Palisades Park, New Jersey start at $300,000 for a one bedroom while two bedrooms in the high $400,000 range and it is also developing a project called the Upper Grand in Hoboken, which was a mix of high-end condos, rentals and retail space.

The filing was made in the bankruptcy court in the district of New Jersey. Tarragon first raised the possibility of filing for bankruptcy last November when it announced it had entered into a restructuring support and forbearance agreement with the holder of $125 million of unsecured notes.

At that time, the developer announced it received a deficiency notice from the NASDAQ Stock Market because the minimum bid for its common stock had fallen below $1.00 share for 30 business days.