US: Several properties and companies linked to Quarters, the coliving brand of Berlin-based Medici Living Group, have filed for Chapter 7 bankruptcy.
A company statement said: “Quarters is closing its US operations. The co-living provider Quarters has closed operations in the United States effective 1/15/2021. With that, all US leases go back to the buildings’ landlords. The company will fully focus its efforts on its homebase in Europe with its locations in Germany and the Netherlands. The closure of the US business requires a restructuring on a holding level. All operative entities in Europe are not touched by this. All existing relationships with property owners in Europe will be continued. Quarters’ will continue focussing on the satisfaction of existing and future tenants.”
The move covers eight properties and two additional limited liability companies. Under Chapter 7 bankruptcy, companies cease operation and liquidate all eligible assets to repay creditors.
The eight Quarters properties owned by LLCs that filed for bankruptcy are located in New York City, Washington DC, Philadelphia and Chicago. In each case, Quarters leased the property from the building owner and then subleased the units to individual tenants. In New York, there are four properties. The landlord of one of them, the DeKalb building, sued Quarters in May 2020 for trying to terminate its 10-year lease. The case is still ongoing.
Combined, the 10 LLCs estimate between $1 million and $5 million in liabilities and less than $500,000 in assets, according to the Chapter 7 filings.
Quarters raised $300 million for its push into the US in early 2019, as well teaming up with Corestate Capital for a €1 billion push in to Europe, where it planned to grow to 6,000 units.
At the time, Medici Living founder and chief executive Gunther Schmidt said: “This investment is a breakthrough for the coliving sector worldwide. The co-living sector has enormous potential – even greater than the coworking sector, and our European investment program presents a playbook for our growth plans in the US and other markets. We fully intend to be the WeWork of coliving.”
The company backed up this statement by hiring former WeWork SVP Rui Barros as CEO.
