Pearl Capital Management - Chapter 11 Case Summary

Pearl Capital Management LLC has filed for Chapter 11 bankruptcy following a $13 million consent judgment in favor of Solera Pearl and affiliated entities that sparked aggressive collection efforts, seeking to satisfy the judgment through a plan of reorganization while continuing to operate its luxury real estate development business, backed by substantial cash flow and real estate collateral that leaves its secured creditors oversecured.

Business Description

Tegethoff Development, LLC ("TD") is a luxury lifestyle real estate developer in the Midwest, predominantly engaged in delivering trophy assets with a 'develop to own forever' mindset. TD, together with its affiliated entities Tegethoff Development Co, LLC ("TD Co") and Pearl Capital Management LLC ("PCM," and together with TD and TD Co, each individually a "Debtor" and collectively, the "Debtors"), operates a singular real estate development business under the common ownership and control of Jeffrey Tegethoff.

Mr. Tegethoff serves as the sole manager and member of TD, the sole member of PCM, and, as Trustee of the JJT Revocable Trust dated November 27, 2017, the sole member of TD Co.
Since 2015, TD and its predecessor PCM have developed and partnered on over 4,000 apartment units, 550 hotel room keys, and 5,000,000 SF of industrial buildings, totaling over $1.5 billion in development value.

Corporate History

Prior to 2020, PCM was the key operating entity behind substantially the same operation as TD. Mr. Tegethoff owned 50% of PCM until 2020, when he bought out his partner to consolidate singular control over all of the Debtor entities.

PCM still maintains some legacy projects but does not plan to continue to seek out new business. Since 2020, TD has served as the exclusive developer and owner of all new projects.
TD Co is an S-Corp that serves as the developer arm for personnel, benefits, and payroll.

All three Debtor entities work together to operate a singular business model, and they each profit from the industry relationships and experience of the other.

Operations Overview

TD's general business model involves working with investors to develop projects, stabilize them from a tenancy perspective, and sell them to fund continued operations.

TD maintains various insurance policies (collectively, the "Insurance Policies") through third-party insurance carriers (the "Insurance Carriers"), as set forth in Exhibit A to the Debtor's Motion for Authority to Maintain Existing Insurance (the "Insurance Motion").

Prepetition Obligations

The bulk of the Debtors' secured debt lies in corporate guaranty agreements for real estate projects, each of which is backed by the subject real estate collateral, which in each case is owned by a downstream entity. In each case, Mr. Tegethoff believes the subject creditor is oversecured by the value of the real estate.

Additional Secured Obligations

Besides its debt secured by real estate, TD has a restricted account with UMB Bank that is pledged, in addition to certain real estate, as collateral for its guaranty obligation.
TD also has a $4,000,000 obligation owed to Robert G. Clark, as trustee of the Robert G. Clark Revocable Living Trust U/T/A Dated December 1, 1994, secured by an interest in future distributions made to TD.

Events Leading to Bankruptcy

Prior to filing, the Debtors' financial situation was generally stable with substantial cash flow. The impetus for the Chapter 11 Cases was a $13,000,000 consent judgment in favor of Solera Pearl, LLC, Solera Expo LLC, and Aspen Investment Group, LLC (the "Judgment") for an alleged breach of a settlement agreement by TD and PCM.

While TD Co was not directly implicated by the Judgment, its business operations are inextricably intertwined with TD and PCM, and its financial situation was similarly impaired by the Judgment.
The Judgment gave rise to aggressive collection efforts, which necessitated the need for relief.

On June 1, 2026 (the "Petition Date"), the Debtors each filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code in the U.S. Bankruptcy Court for the Eastern District of Missouri, Eastern Division. Mr. Tegethoff believes the Debtors will be able to service the Judgment through a plan while continuing to operate their businesses and service their other debts.

First Day Relief

Concurrently with the petitions, the Debtors filed several first day motions and applications, the approval of which Mr. Tegethoff describes as an important element of successful Chapter 11 Cases.

Joint Administration: The Debtors filed a Motion for Entry of an Order Directing Joint Administration of the Chapter 11 Cases (the "Joint Administration Motion"), citing their common ownership; substantially similar business and structure; several shared secured and unsecured creditors; the fact that TD and PCM share the same primary judgment creditor; and the procedural burden of filing multiple pleadings in each case.
Retention of Counsel: The Debtors seek to employ Carmody MacDonald P.C. ("CM") as their counsel based on the firm's familiarity with the Debtors' business and legal affairs and its experience in debtors' and creditors' rights and chapter 11 business reorganizations. To the best of the Debtors' knowledge, Robert E. Eggmann and the other CM professionals have no connection with the Debtors or other parties-in-interest, are "disinterested persons" under section 101(14) of the Bankruptcy Code, and hold no interest adverse to the estate, except as set forth in the Eggmann Declaration.
Insurance: TD seeks authority to maintain its existing Insurance Policies and to pay related obligations, including premiums, fees, and post-petition installment payments as they come due, to avoid any interruption in essential coverage.