Cash-strapped Olympia & York Developments Ltd. has asked a court to put its massive Canary Wharf office complex in London under bankruptcy protection, the company said Wednesday.
Canary Wharf, Europe's largest commercial property complex, is a cornerstone of the O&Y; empire controlled by the Toronto-based Reichmann brothers.
The move to appoint an outside administrator to run the complex came after creditor banks refused to put up $898 million to get Canary Wharf on sound footing for the long term.
The banks told O&Y; that "there was insufficient support for financing of the build-out (completion) of the project," the company said in a statement.
The Reichmanns, Paul and Albert, have been in long talks over how to restructure about $12 billion in company debt.
Under British law, the appointment of an administrator is similar to a Chapter 11 bankruptcy protection filing in the United States.
Unlike under U.S. law, an outside person is automatically brought in to run the company.
The Reichmanns, plagued by huge debts, high vacancy rates and lack of cash, had been trying to keep the project going without resorting to bankruptcy. O&Y; had already filed for bankruptcy protection in Canada and the United States, but its U.S. assets and Canary Wharf were not included in the action.
The Canary Wharf filing will leave little besides O&Y;'s far-flung U.S. holdings outside of court protection.
The Reichmanns said they made the Canary Wharf filing to protect assets while they seek an outside equity stake. They have been wary about giving up ownership in their properties even as their cash problems have mounted.
Canary Wharf is an ambitious project, meant to shift London's business center away from the City of London's Financial District to once-derelict upstream docks along the river Thames.
But it has been plagued by high vacancy rates and big debts.
The Reichmanns had been seen as the rescuers of the project when they took it over in 1987. A group of investment banks in charge at the time had run into serious financial problems.
The Financial Times of London broke the news that Canary Wharf would be placed under bankruptcy protection.
The paper said partners of the accounting firm Ernst & Young were expected to be appointed as receivers or administrators.
An 11-strong core group of bankers to Canary Wharf and Olympia & York had been negotiating for most of the week and deep into the night to discuss whether to renew a $37.7-million credit line that was to expire Sunday.
O&Y; was also pressing for the additional $898 million to complete the project and keep up interest payments.
The world's largest commercial real estate developer put its Canadian assets into Canadian and U.S. bankruptcy protection on May 14.