Major BANKRUPTCY *JUST HIT* | America is Crumbling

about guests left homeless as rental

company Saunder abruptly goes out of

business. Deal with hotel terminated.

They treated us so poorly. You know,

this is actually really interesting

because I was just reading about a Ritz

Carlton developer uh going bankrupt and

I pulled up the lawsuit for it and I

want to see what happened with this uh

on Marriott here. But we're seeing this

happen more and more. Look at this. $2

billion Ritz Carlton Paradise Valley

developer files for bankruptcy. So, I

actually pulled up their lawsuit and uh

started going through it. Here it is,

the bankruptcy petition. And what I

thought was really remarkable about it

as as I was reading through it is they

basically had this construction

financing that uh they got arranged from

this group called Madison Capital LLC.

and Madison Capital LLC is like, "Hey,

we're done funding your construction

project." And the Ritz Carlton developer

is like, "Bro, we're not done building

it yet." And they're like, "Sorry,

you're rugged. We're not paying an extra

dime." And so now you've got the

developer for this Ritz Carlton facility

going to the bankruptcy court going,

"Bro, we need millions of dollars so we

can keep like servicing our debt. We

have $644 million of debt." This is

always how it happens, dude. debt kills

you. Right here it is. Madison claimed

that their obligations had been fully

funded and no funds remain to complete

construction. So all of a sudden, that's

the construction loan agreement. All of

a sudden, this this lender bankrupts

basically this business who's trying to

build a Ritz Carlton. And you know what

blows my mind is they are literally

begging the court right now for $6

million. And you know what those $6

million are for? Think about this for a

moment. What would you guess the $6

million are for? They're asking for $30

million of debtor and possession

financing, but they want six advanced

right away. You can see this right here.

So, uh, this is where they're asking for

$30 million. And right here, up to $30

million of a total commitment in a, uh,

DIP loan, debtor in possession loan.

They want $6 million immediately. Okay.

I want you to ask yourself, what do you

think they want the $6 million for? This

is going to piss you off. Okay, you will

you will absolutely punch the air when

you hear this. Okay, they're like, "We

need $6 million." When I first saw they

need $6 million, I'm like, "Great.

You're going to pay your vendors. You're

going to pay your drywallers. You get

the construction project going, pay some

interest money, right? Like, keep keep

the construction going, right, folks?

The $6 million, you want to know what

it's going to go to?" The debtors

anticipate that the total costs of legal

assistance required within the first 7

weeks will be $6.5 million.

In other words, we want you to approve

us borrowing an extra $6 million just so

we can pay for structuring our

bankruptcy because the attorneys are

taking the first $6.5 million.

Like, dude, this is insane, man. Like

this this is what the this this is like

so recessionary. I hate to say it, but

like a Ritz Carlton developer $644

million in debt. And then all of a

sudden they get rugpulled because one of

the lenders is like, "Sorry, bro. We're

Madison Capital LLC. We don't believe in

you anymore because we got nervous or

private equity is tightening or

whatever. We're going to rug pull you."

Then they're like, "Crap, now we got to

file for bankruptcy. before we even do

anything, we're going to have to raise

$6 million just to pay for attorneys.

You know, this comes as, you know, now

Max is so nice and donates to the live

stream here and says, "Cavet, check out

what happened with SE." And this is what

we opened with. Marriott guests left

homeless as rental company Sonder

abruptly goes out of business. I I just

want to be clear here. I am nervous,

okay? I I am I am not happy about where

the economy is right now. I really think

people are going to get absolutely

wrecked with debt. I mean, I and I hear

it already. I'm already hearing of

people like, "Dude, I got a six-figure

margin call." And I'm like, "Have you

not listened to like one Meet Kevin

video for the last year?" You know, I

know it's been sexy to be on margin

since liberation day, but dude, like you

got to pay the bill at some point. You

said some trailing stops, man. Holy

smokes, dude. I don't like debt right

now at all. Hotel guests around the

world were left homeless when they were

evicted with only hours of notice as

Marriottbacked Sa filed for bankruptcy,

creating a vacation nightmare. So, just

so you know, Marriott only operates like

2% of their hotels. Marriott is a brand.

It is not actually a hotel operator.

founded by Mormons, great brand, but

Marriott doesn't operate this stuff.

Marriott is just sort of like, hey, if

you follow our rules, we'll let you use

our brand name and our app, Bonvoy, you

know, all this kind of crap, whatever.

But it's not actually uh a a hotel

operator. And and I think we usually

say, "Oh, I like Marriott Hotels." You

just like the brand, but they're not the

ones running it. You have these

individual investing companies that end

up operating these businesses and those

end up being the ones that when they go

bankrupt, you know, Marriott just washes

their hands of it. They're like, "Oh,

that's not our problem. You know, we

didn't go bankrupt. That's just some

random brand." But it's a pisser because

the people who are, you know, staying at

these facilities, they don't know. Of

course not. Most people don't know that

about Marriott. Uh, which I mean, now

you know, but look at this. This was the

filing from this business. Sonder

Holdings to complete immediate windown

operations.

Okay, so dude, they're liquidating. Holy

smokes. So this the one that I just

talked about with uh the Ritz Carlton

facility, you know, the developer going

bankrupt. They filed, I think it was

chapter 13 or 11, I can't remember which

one it was, but they filed a

reorganization to try to get by time to

kind of keep the project going.

Saunders's like, "Peace. We're peacing

out, homies. We're out. We're out. Uh,

and take a look at this. Operates a

global brand. Well, they don't really

operate a brand. They might actually

operate, in my opinion. I mean, maybe

they do. Maybe they are a brand.

Designforward apartments. Well, what the

hell is a designforward apartment? Uh,

this is the other thing. People went

crazy buying apartment buildings in like

South Florida and Texas and stuff. This

is why I think you got to be really

careful of like the Cardone types or

whatever. They bought in these overbuilt

areas and now the the rents are

plummeting on them and they're like look

there's they're begging for liquidity to

get out of these projects and I'm like

man this is why you know we we love the

single family game we just bought like

11 single families in an underbuilt

area. Uh and you know I I realize in in

like a challenging time it's sort of

like how could you buy 11 single

families? Well, keep in mind we actually

think we're providing housing because we

buy, you know, nasty hoarder homes and

uh and then fix them up to give housing

to people. You know, we think we're

helping housing. But anyway,

so what is this? Today announced it will

complete winding down operations

immediately and expects to initiate

chapter 7 liquidation of its US

business. The company intends to uh

initiate insolveny proceedings with

international countries in which it

operates. Sa has faced severe financial

constraints

having to do with prolonged challenges

in the integration of the company's

systems and booking arrangements with

Marriott. Whoa. They're blaming

Marriott. They're like, "Yo, your Bonvoy

app sucks, bro." And um holy smokes.

They're like literally trying to blame

Marriott for their failure. Somebody

here writes, "Paradise Valley and

regular Scottsdale has been areas has

been areas by the way. The new flex is

in Cave Creek and North Scottsdale

writes packet watchdog here." Huh,

interesting. Uh, so Tom from MySpace

says, "Think he said house hack has no

debt." Correct. House hack has no bank

debt. You know, we have a small amount

of outstanding bonds for people who are

investing in the current round so they

can get their 5% yield through

conversion. You could read about that

over at houseack.com. But we don't have

any bond debt uh or sorry any bank debt.

We don't have any bank debt which uh is

valuable. Uh and you know the debt we

have is a fraction of the total assets

we have. You know if we've got you know

80 90 somethingish million dollars in

assets uh then you know we've got what

1920ish or whatever in in bonds. So it's

a fraction. Uh so uh take a look at this

here. So Sunday November 9th Marriott

International announced it's terminating

its licensing. Oh, Marriott rug pulled

on on s which means all of a sudden all

of like any of their hope of using the

Marriott brand is gone. The company is

evaluating sale of the business to

improve its financial condition. Bro, it

always comes down to debt. Company is

engaged uh with financial parties but

ultimately unable to execute a viable

transaction for its business to obtain

liquidity. That's what it is. This is

always what happens, folks. This is how

recessions happen is people are maxed

out on debt and then all of a sudden

they start pointing fingers. You know,

the Ritz Carlton guy goes, "Yo, it's

Madison's fault. They lied and they

didn't fully fund." And then Madison's

like, "Yo, it's not our fault. It's

private equity got more nervous." And

then you start seeing who's swimming

naked and all the cards start falling.

And then all of a sudden Saunders like,

"Crap, we don't have enough money to

properly integrate the Marriott system."

And then Marriott's like, "Well, you

guys are creating a bad experience for

the customers. We're fielding the

complaints. You guys are cut off." And

then Saunders's like, "Bro, without your

brand, we're screwed." And Marriott's

like, "That's why you shouldn't have

effed around." They're like, "We

couldn't help it. We were so far in

debt. We couldn't get the liquidity."

And then Marriott goes, "That's your

problem, not ours. That's what happens

in this kind of stuff." You know, and

then people sue each others. We are

devastated to reach a point where

liquidation is the only path forward.

Unfortunately, our integration with

Marriott International was substantially

delayed due to unexpected challenges in

aligning our technology framework

resulting in unanticipated costs as well

as a sharp decline in revenue arising

from Yep, there it is. This is what I

said. I told you it's the Bonvoy system.

That's crazy. Uh integration or their

participation with the Bonvoy

reservation system. the board and I

deeply are deeply grateful for our

employees additional information to

come. Wow, dude. That's wild to me. So,

now this is where you're getting now the

stories of people going to these these

hotel chains and then all of a sudden,

you know, they're literally getting

kicked out. Now, that that's next level.

Honestly, that that sucks to be in a

hotel POV trying to maintain my

composure while dragging my luggage down

the street after Marriott Hotels and Sa

Hotel broke up with each other on a

random Sunday and told us the GTFO of

the hotel room we had booked for three

nights in Montreal. Oh my gosh,

[laughter] this is so dramatic, dude.

Jeez. retired tech executive was in the

middle of a 17-day stay in New York uh

with his wife and daughter and newborn

granddaughter in the Saun Battery Park

apartments when the company abruptly

went out of business. Wow. I mean, I

guess if you were a tenant, you know,

not a hotel tenant, but like an actual

tenant in their apartments, you probably

are going to be fine for a while until

somebody buys them at a discount. That's

not great for apartment pricing. again.

Uh, travel influencer claimed he became

homeless because of the license.

Uh, all right. Yep. Sad pictures.

Whatever. Whatever. Whatever. Okay. So,

I wonder if they have financials. They

might not if they're a private company.

Sa Holdings financial filings. This is

wild. No, they got an annual report. Do

they go private or something? So, this

is Let's see if they have quarterly

results. Oh, here we go. SEC filing

press release Q125. Why did they stop

doing financials?

So, this is their Q1 filing. Let's just

look at their balance sheet. You know

why we look at the balance sheet, right,

boys and girls?

>> Kevin is much more interested than most

people, by the way, in the balance

sheet.

>> That's right. That's right. We're going

to look [laughter]

Oh my lord. All right. Q1 Sonder

Holdings. This is the stuff we do around

here, okay? We try to figure out like

what kind of canary in the coal mine was

there. Uh because you know, just like my

wife tells me, Kevin might be early, but

at least he's right. All right, let's

see here. Uh so current assets.

Let's see here. Total assets of Bill.

Okay, so I've got cash here. Very little

cash. I'm already noticing that they've

got $23 million of cash, 43 million of

restricted cash, which could be set

aside for construction obligations. I've

got current liabilities of taxes,

acruds, payables,

operating lease liabilities. Look at

this minus I'm going to take the

deferred out. If I take the deferred

out, I have $283 million. $283 mil of

bills to pay and

um cash available of $66 million. Q1

2025. The writing has been on the wall

of this. By the way, like you can look

at this when it comes to companies. This

isn't what I did was not that hard. I

cut off their deferred revenues. Mind

you, these deferred revenues, deferred

revs will now become actual debt in

bankruptcy that they have to pay back

because they're not going to be able to

fulfill that, right? But look at this.

In the first quarter of 2025, they

already had no money. They had 200.

Like, imagine having $283,000

of bills on your desk and you only have

$66,000.

Okay? You have $4 of short-term debt for

every $1 of cash you have. You're

screwed, man. Absolutely screwed.

Somebody here writes, "I stayed at a Sa

Hotel earlier this year in Cali. It was

a cheaper of price, but the quality of

the room was meh." Well, yeah. Uh, so

that's what happens. you know, the

quality starts suffering and people get

pissed off, but they don't have money.

So, they probably didn't have money here

to upkeep the rooms. What's their

revenue? Their revenue is tanking. So,

that's another problem. Look at this.

You've got 118 mil versus 133 last year.

That's a 12% decline in revenue. Uh, so

the writing was on the wall here. I

mean, this is like Sears. They can't

even operate the business profitably

anymore. Look at this. They take the

integration charge here. $1.5 million.

Maybe y'all should have spent a little

bit more on that. Geez, that actually

seems cheap and they couldn't get it

right. What a surprise. But anyway, look

at these losses. $56 million in losses.

Let's look at the statement of cash

flows. Statement of cash flow.

We have 4 million of cash flow plus

plant property equipment. They're

burning another $56 million of cash

flow. And this was in 3 months ending in

Q1. And how are they taking on Oh, they

actually did pay off a little bit of

debt. $250,000. I mean, that's nothing.

Uh, so like this is scary. You know,

this is just an example where the

writing was on the wall for this company

to go bankrupt. It's going it went now

it's going bankrupt. It's literally

liquidating. At the same time, you've

got this Ritz Carlton developer going

bankrupt. Uh, and then, you know, Max is

bringing this up as well, but other

people have brought this up uh to me.

I've seen this in the comments like 50

times. Uh I actually haven't addressed

it yet, but the reverse mortgage

explosion for seniors is is exploding.

Uh which is crazy because rates are kind

of high right now, but it's somewhat

implies that people are out of freaking

money. So, you might not know what a

reverse mortgage is. I'll give you a

quick explanation of it. Okay, let's say

you're sitting in a home that you own

free and clear or maybe you have

$100,000 of debt on it, whatever. but

it's worth 500 grand. You could go to a

lender and say, "Hey, I want to borrow

up to 400 grand against this property.

Uh, and what I want you to do is charge

me interest, but I want you to take that

out of the equity that I have in the

property, and I want you to give me

money." So, you literally squeeze equity

out of the property, and you make the

the the your basically your net worth

shrink every single month. And the way

you do that usually just elderly people

I think you have to be older than 65 to

do this. Uh the way you do that is to

get a steady flow of cash flow for temp

generally the rest of your life but it

depends on how they actuate it out and

and you know what what they end up

calculating out could be 20 years

whatever. And so you get a stable flow

of cash flow. It's kind of like an

annuity based on your house equity. And

uh you use that to live. And so if

reverse mortgages are skyrocketing now

at a time when interest rates are

absolutely ridiculous, they're very very

high right now. You have people that are

broke going to reverse mortgages. Yeah.

Look at this cashstrapped American

seniors are turning to reverse mortgages

as controversial type as the

controversial type of loan that soared

during the financial crisis uh you know

as as people try to make ends meet start

skyrocketing again. Yeah. Sales of

reverse mortgages have jumped this year

as looming cuts to government benefits

and persistent inflation have weighed on

heavy older people. Reverse mortgage

borrower is typically 62 or older, gets

cash from the lender in exchange for

equity in their home. Correct. Uh 80 is

a typical borrower who turns to reverse

mortgages. The retiree lives in

Washington state and receives $1,800 a

month from government money. Then took

out a reverse mortgage from Finance of

America 11 months ago. He was confronted

with a bill for new dental crowns that

he struggled to afford and ended up

using a reverse mortgage to pay for it.

Yeah. It's like it's basically the the

needle that broke the camel's back, you

know, or the straw that broke the

camel's back. It's it's so many cuts and

cuts and cuts. And that's actually why I

believe that right now we're not in a

soft landing environment. We're actually

more like a slow bleed economy. So, what

I mean by that is I think the economy

that we're in right now is not a plane

that's hey guys everything's fine on the

plane and it's coming in for a landing.

Like if this is a plane analogy like

there's a fire at the tail, okay? Like

half of the plane is on fire and it's a

miracle it's still flying. So, but

that's a little graphic. So, I like the

slow bleed analogy where it's like

you're walking through the desert and

you're parched and you're bleeding out

by the legs and it's kind of like don't

worry, everything's fine. It's like you

got that last minute optimism. Uh, and

that's what the economy looks like. In

fact, uh, there are two leaked images I

want to show you.

The first one is, uh, the face of this

person walking through the desert. Uh

it's this

I don't need it. Uh and then the second

uh is Jerome Powell and uh there's now

leaked footage of Jerome Powell driving

through the fog. And um you know,

apparently these are like Russians

driving through the fog. And uh as the

saying goes, it ends exactly how you

would expect it to end. So, I'll just

fast forward a minute here. And uh

you've got him uh driving in the fog and

then they don't realize there's a turn

coming up and oh no. Oh, oh, I I guess

we messed up. Now, you know, obviously

you don't want to wish an injury upon

anyone, but like the analogy is there

that's present that's like, you know,

the Fed doesn't have job data, so they

can't properly support us. You literally

had Scott Besson this morning going now

the economy is doing bad because of the

Democrat shutdown. It's like bro

that wasn't the straw that pushed us

over the edge man. Uh but whatever. And

if anything, you know, many can make the

argument that that uh Trump's

stubbornness because he wanted to set up

layoffs, uh, you know, the riffs that he

gave, uh, vote the license to do the

reductions in force contributed to

wanting a shutdown, to weaponizing a

shutdown, just somewhat backfired

because people were very frustrated over

this. But these are problems. Uh, and so

it's not a surprise that you're seeing

more and more of these bankruptcies now.

uh not only now Sa but the Ritz Carlton

bankruptcy uh and this uptake in reverse

mortgages. It's a scary scary time for

for liquidity. And that's what we got to

pay attention to is if people think that

everybody's rich and everybody has money

because, you know, we look at these

these charts that are like, "Oh, hey

guys, uh we've got um you know, all all

this money sitting in money markets like

everybody's rich. Like imagine when all

this money goes into the stock market."

That's the thesis people have. But

people forget that

this cash is usually money that

Microsoft or Nvidia has sitting around.

These aren't normal everyday people and

they're using a lot of it, yeah, to buy

back their own stock. But is that going

to help the traditional consumer, the

everyday American? Not in my opinion. I

think the everyday Americans getting

screwed right now. That's why you're

seeing these bankruptcies at Ritz

Carlton, Sa reverse mortgages

skyrocketing. It's just a matter of time

before rates actually come down and you

end up having a refinance boom. And it's

not going to be a refinance boom where

people are refinancing their homes

because they get to go invest. People

are going to start refinancing their

homes out of desperation. That's what

I'm really worried about. Now, I think

everything will end up going down if

there's some kind of market correction.

But that's one of the reasons why I keep

looking at like the mortgage lenders,

for example, because I think the

mortgage lenders, well, they'll go down

if there's a crash, no doubt. Uh they

will have probably the greatest earnings

from desperate people flocking to

mortgage lenders to get any possible

money that they can out of their homes.

And you're already seeing some of that

with these reverse mortgages. So, it's

just it's a wild time. It's just a it's

a really crappy crappy time. Uh uh you

know that's that's my take.

>> Why not advertise [music] these things

that you told us here? I feel like

nobody else knows about this.

>> We'll we'll try a little advertising and

see how it goes.

>> Congratulations man. [music] You have

done so much. People love you. People

look up to you.

>> Kevin Praath there, financial analyst

and YouTuber. Meet Kevin. Always great

to get your take.