House Canary New Jersey - Chapter 11 Case Summary

HouseCanary filed for Chapter 11 in New Jersey following its default under a secured loan facility of up to $30 million, failed amendment negotiations with prepetition lender and a foreclosure auction of substantially all operating assets scheduled for the petition date. The company seeks to halt that sale and reorganize while preserving operations to prosecute an approximately $175 million trade secrets and fraud verdict against Amrock, backed by a proposed multi-draw DIP facility of up to $15 million.

Business Description

HouseCanary, Inc., together with its Debtor affiliates (collectively, the "Debtors" or "HouseCanary"), is a San Francisco-headquartered real-estate technology company that builds and operates an artificial intelligence-powered data and analytics platform covering more than 136 million residential properties across the United States. The Debtors provide real estate valuation, analytics, forecasting, data, and data-visualization services to financial institutions, government-sponsored enterprises, mortgage lenders, investment banks, whole loan buyers, single-family rental REIT operators, real estate agents, and other participants in the real estate market.

HouseCanary is also a licensed real estate brokerage operating in all fifty states and the District of Columbia, under the trade names "HouseCanary" and "ComeHome" depending on the jurisdiction. Six entities filed: HouseCanary New Jersey, Inc.; HouseCanary, Inc.; HouseCanary (CT), Inc.; ComeHome, Inc.; HC Certified Analytics, Inc.; and HouseCanary R&D, LLC.

Corporate History

HouseCanary was founded in 2013. HouseCanary, Inc. is the ultimate parent company of the Debtors; HouseCanary New Jersey, Inc. is incorporated in New Jersey and the remaining Debtor entities are incorporated in Delaware. Chris Rediger was promoted to Chief Executive Officer in the first quarter of 2025, having previously served as Head of Product beginning in 2021 and as Chief Revenue Officer beginning in 2023.

The Texas Litigation

HouseCanary is the plaintiff in two related proceedings (together, the "Texas Litigation"), both concerning the misappropriation of HouseCanary's proprietary valuation models, data, and analytics: HouseCanary, Inc. v. Amrock, LLC in the 438th Judicial District Court, Bexar County, Texas, and HouseCanary, Inc. v. Quicken Loans Inc. in the United States District Court for the Western District of Texas.

The Texas state court litigation has a lengthy history. After a seven-week trial in 2018, a jury unanimously found that Amrock (then known as Title Source, Inc.) had misappropriated HouseCanary's trade secrets, breached the parties' agreements, and committed fraud. The jury awarded HouseCanary $235.4 million in compensatory damages and $470.8 million in punitive damages, and the trial court entered judgment for approximately $739.7 million, including prejudgment interest and attorneys' fees. The jury also rejected all of Amrock's affirmative claims.
In 2020 the Fourth Court of Appeals reversed the trial court's judgment on certain grounds but affirmed the jury's finding that Amrock should recover nothing on its claims against HouseCanary and confirmed that HouseCanary owned valid and valuable trade secrets. The case was remanded for retrial.
On March 6, 2026, after a four-week retrial, a Bexar County jury again found that Amrock misappropriated HouseCanary's trade secrets and defrauded the company, awarding approximately $175 million in compensatory damages, which the Declaration describes as an effective minimum, with additional interest, costs, and fees to be determined. The Declaration anticipates that, with interest (including at least ten years of accrued interest), the award will exceed $260 million, plus attorney fees, charges and costs. Amrock has stated it will appeal. HouseCanary must remain operational, staffed, and able to preserve its systems, records, and personnel to obtain entry of judgment on the verdict, address post-trial proceedings, defend the judgment on appeal, pursue enforcement, and prosecute the related federal action.

Operations Overview

The Debtors run two core lines of business. The first is a self-service, subscription line under which customers access data reports through a standardized user experience and pricing model. The second is a contract-based service under which HouseCanary delivers its real estate data points and its interpretation of available data programmatically. Through these lines, the Debtors provide their customers with automated valuation reports and data subscriptions. The value-added products are compliant with government funded mortgage programs.

HouseCanary's automated valuation models use machine learning to analyze real estate data, with a reported 2.7% median error rate on listed homes.

Management and Workforce

Senior management consists of Chris Rediger as Chief Executive Officer, Jeremy Sicklick as Executive Chairman, Chris Stroud as Chief Research Officer, and Christine Sloan as Chief Financial Officer. Beyond the executive team, the Debtors employ 37 individuals, a majority of whom live and work remotely in California and Colorado. Although the Debtors maintain a San Francisco headquarters address, they operate as a completely remote work organization. The Debtors' next payroll date falls on or about September 28, 2026.

Prepetition Obligations

The Loan and Security Agreement

HouseCanary is the borrower under a Loan and Security Agreement dated on or about March 25, 2021 (the "LSA") with Ocean II PLO LLC ("Ocean II") as administrative and collateral agent, and Structural Capital Investments III, LP, Series Structural DCO II Series of Structural Capital DCO, LLC, and CEOF Holdings LP as lenders (collectively, the "Lenders"). The LSA established a credit facility of up to $30 million.

HouseCanary granted the Lenders a security interest in substantially all of the Debtors' tangible assets and contracts (the "Collateral"), subject to significant exclusions. The LSA excluded the Debtors' Texas litigation claims, intellectual property, litigation proceeds, the litigation reserve account, and certain other collateral (collectively, the "Texas Assets").
The LSA was amended six times. The Sixth Amendment, dated December 29, 2025, extended the maturity date to January 31, 2026. HouseCanary did not repay at maturity and is in default.

Litigation Funding Facility

The Texas Litigation is funded by HC 1, LLC ("Bentham") pursuant to a litigation funding agreement, and Bentham holds a lien on certain collateral related to the Texas Litigation. On or about January 8, 2026, HouseCanary entered into an Amended and Restated Litigation Funding Agreement (as amended, the "LFA") with Crane 2 FundingCo 23, LLC ("Crane 2," and together with Bentham, the "LFA Parties"). Under the LFA and subsequent amendments, HouseCanary granted Crane 2 a security interest in certain collateral, including the Texas Litigation claims, proceeds of the Texas Litigation, the litigation funding account, and the Debtors' intellectual property related to the Texas Litigation (collectively, the "Crane 2 Collateral"). The LFA contains extensive covenants restricting the Debtors' ability to grant additional liens or security interests on the Crane 2 Collateral.

Events Leading to Bankruptcy

The Declaration attributes the Debtors' prepetition distress to capital structure constraints and financial covenant compliance issues, compounded by litigation with the prepetition lenders that the Debtors describe as posing a material risk to their ability to operate as a going concern.

Failed LSA Amendment Negotiations

During the first half of 2026, Ocean II and HouseCanary negotiated to amend the defaulted LSA. Ocean II demanded certain concessions as a threshold requirement for any amendment, including a lien on the Debtors' intellectual property; the Declaration states that Ocean II knew certain of those concessions would be inconsistent with HouseCanary's existing contractual obligations to Crane 2. HouseCanary approached Crane 2 seeking a three-way compromise. Ocean II then changed course and demanded an "amendment fee" of $20 million, approximately half of the existing obligation, in lieu of the intellectual property lien; that demand was rejected and subsequently withdrawn. When Ocean II returned to negotiations, per the Declaration it refused to review any proposed amendment documents, characterizing them as too "complicated." Crane 2 provided HouseCanary with additional capital to support liquidity during the process and proposed multiple potential solutions to HouseCanary and Ocean II. Negotiations broke down and no amendment was executed.

Throughout the summer of 2026, HouseCanary explored capital-raising opportunities and potential sale transactions and engaged in extensive negotiations with key stakeholders in an effort to address its capital structure outside of court. It also continued its efforts to sell its entire business, which would have resulted in a cash payment to the Lenders. The Declaration states that in summer 2026 Ocean II interfered with the Debtors' discussions with a capital provider whose financing, if consummated, would have strengthened HouseCanary's capital structure, liquidity, and credit profile, and that in the midst of that process the Lenders began sending threatening and disruptive correspondence and ultimately issued a notice of disposition of the Collateral, materially interfering with the Debtors' ability to complete the contemplated financing.

The Foreclosure Sale

On September 8, 2026, Ocean II issued a Notice of Disposition of Collateral, scheduling a public auction of the Collateral for September 22, 2026 at 1:00 p.m. PDT at its counsel's offices in Menlo Park, California. The initial advertisement, published September 9, advertised an auction date in "2020." Ocean II served a corrected notice and published corrected advertisements on September 11, leaving eleven days before the sale.

The Declaration identifies multiple deficiencies in the process. Ocean II had not retained an investment banker or a broker, had not opened a data room, and had not circulated a non-disclosure agreement to interested parties. On September 15, 2026, Ocean II's counsel acknowledged in writing that Ocean II lacked the basic information a prospective bidder would need to evaluate the collateral. When an interested bidder, SWE Homes, contacted Ocean II seeking a brief overview of what HouseCanary does and whether it was operating as a going concern, Ocean II was unable to answer and instead sought responses from the Debtors. Search results describing the sale stated that Ocean II would offer "all of HouseCanary's assets, intellectual property, software, accounts, and business components," conflicting with the notice's exclusion of intellectual property. Ocean II also demanded that HouseCanary assemble all of the collateral at a location in downtown San Francisco, more than thirty miles from the auction site, on September 23, 2026, the day after the scheduled sale.

On September 10, 2026, HouseCanary's counsel wrote to Ocean II's counsel objecting to the notice period, the absence of any marketing process, and the misdescription of the collateral, and requested that Ocean II retain an investment banker. Ocean II kept the sale on schedule over those objections. The Declaration states that a sale of substantially all operating assets, excluding intellectual property but including customer contracts, equipment, accounts, and inventory, would terminate HouseCanary's customer contracts, workforce, and market position, with no practical mechanism to reassemble the business once the assets were dispersed.

The San Mateo Action

On September 17, 2026, HouseCanary filed a Verified Complaint for Declaratory Relief and related claims in the Superior Court of the State of California, County of San Mateo (the "San Mateo Court"), seeking to enjoin the September 22, 2026 foreclosure sale. HouseCanary filed an ex parte application for a temporary restraining order and an order to show cause for a preliminary injunction on September 18, 2026. On September 21, 2026, the San Mateo Court denied the request for a temporary restraining order. The Debtors filed Chapter 11 the following day.

Chapter 11 Filing

Each of the Debtors filed voluntary Chapter 11 petitions on September 22, 2026 (the "Petition Date") in the United States Bankruptcy Court for the District of New Jersey. The Declaration gives five reasons for the filing: invoking the automatic stay to halt Ocean II's foreclosure sale; preserving the Debtors' operations and workforce to protect their ability to prosecute and preserve the approximately $175 million Texas Litigation verdict; preventing the Lenders from using the foreclosure process as a vehicle to obtain security interests or rights in intellectual property that they did not negotiate when the LSA was originated; achieving a resolution with respect to the Debtors' ongoing business operations and the intellectual property that is the subject of the Texas Litigation; and affording the Debtors an opportunity to reorganize, pursue value-maximizing transactions, and maximize recoveries for all creditors, including the Debtors' lenders.

The DIP Facility

The Debtors will seek approval of a proposed multi-draw term loan facility (the "DIP Facility") on the following terms:

Size: up to $15 million, with an initial commitment of up to $3 million (the "Interim Amount").
Availability: $1 million upon entry of an interim DIP order, the remaining $2 million of the Interim Amount following satisfaction of certain conditions in the DIP term sheet, and the balance upon entry of the final DIP order.
Collateral: liens on all of the Debtors' unencumbered property, including first-priority liens on certain of the Debtors' intellectual property, junior to the liens the Lenders purportedly hold on certain prepetition collateral under the LSA (subject to the Debtors' reservation of rights as to validity, extent, priority and perfection) and to the liens held by the LFA Parties under the LFA. The DIP lender would also be granted superpriority administrative expense claims.
Use of proceeds: operational expenses, including payments under certain leases, employee-related costs, and maintenance expenses; restructuring costs and professional fees; amounts payable under the DIP loan documents; and adequate protection payments to the LFA Parties, in each case in accordance with an approved DIP budget.

First-Day Relief

Customer Program — The Debtors seek authority to continue their customer program with existing customers, with a final hearing to be scheduled. The Declaration states that customers with whom the Debtors held discussions in recent days communicated a strong willingness to support continuing the automated valuation report and data subscription lines on a focused basis, with pricing designed to allow the Debtors to continue them.
Wages — The Debtors anticipated filing imminently, ahead of the next payroll, a motion for interim and final authority to pay prepetition wages, salaries, other compensation, and reimbursable expenses, and to continue employee compensation and benefits programs in the ordinary course.
Cash management — Interim and final authority to use the existing cash management system, bank accounts, and business forms, to prohibit setoffs and freezing of bank accounts, and a 45-day waiver of the section 345(b) deposit and investment requirements commencing upon entry of an interim order.
Administrative relief — Joint administration under lead case HouseCanary (NJ), Inc.; a 28-day extension of time to file schedules of assets and liabilities and statements of financial affairs; and appointment of Omni Agent Solutions, Inc. as claims and noticing agent effective as of the Petition Date.

Key Dates

March 25, 2021 (on or about) – LSA dated; credit facility of up to $30 million.
December 29, 2025 – Sixth Amendment extends LSA maturity to January 31, 2026.
January 8, 2026 (on or about) – Amended and Restated Litigation Funding Agreement with Crane 2.
January 31, 2026 – LSA matures unpaid; HouseCanary in default.
March 6, 2026 – Bexar County retrial verdict of approximately $175 million against Amrock.
September 8, 2026 – Ocean II issues Notice of Disposition of Collateral.
September 11, 2026 – Corrected notice and advertisements published.
September 17, 2026 – HouseCanary files Verified Complaint in the San Mateo Court.
September 21, 2026 – San Mateo Court denies the temporary restraining order.
September 22, 2026 – Petition Date; scheduled foreclosure auction date.
September 28, 2026 – Next payroll date.