Real estate giant Redfin, a company that has raised $2 billion through crowdfunding, is preparing to file for bankruptcy protection amid new rules that would require lenders to get approval from the state.
The new rules, approved by the State Bankruptcy Court on Thursday, would require a buyer to apply for a state-approved loan in advance and that the lender be licensed to operate in the state, but there are no specific requirements that lenders must meet in order to take advantage of the rules.
Redfin has raised a total of $2.4 billion from investors, according to the company’s website.
The company has been embroiled in legal battles with banks and regulators in recent years, including one in the District of Columbia.
Redflights, which has about 40 properties in California, Nevada and Arizona, is facing new challenges from state regulators after Redfin agreed to buy the home of a high-profile investor and move her money to a separate bank account, according the Los Angeles Times.
The bank was later fined for violating state securities laws and ordered to pay $4.6 million in penalties.
In an email, Redfin spokesperson Laura Parnell told Politico that the bank is “committed to a strong, independent financial position that meets the needs of our business and our investors.”
Redfin will be required to pay up to $2 million in civil penalties and interest to the State of California, according a filing with the State Court of Appeal.
The California Banking Authority also filed a lawsuit last week to block the new requirements, arguing that they would “pose a significant barrier to the timely and efficient administration of the [California] Securities Code.”
The state bank has said it has already begun work on implementing the rules, according this Los Angeles Business Journal article.
RedFlights, Redflowers, Redlanes, RedFlows and Redflows Properties are among the companies that have raised tens of millions of dollars through crowdfunding in recent months.
RedLanes has raised more than $3.5 million through crowdfunding and is seeking to build a $200 million residential development in Los Angeles, according Redflanes.
Redlains first property was bought in May and later sold to a developer for $4 million.
The project will include five luxury apartments, a restaurant, and an 18,000-square-foot parking garage, according an investor blog post.
Red Flights is one of several real estate startups raising millions of dollar in new funding, including OneWest, which raised $1.3 million through its crowdfunding.
The startup has also raised $10 million from investors like Tiger Global and Bank of America.
Red Fin’s $1 billion valuation is nearly half of Redfin Capital, a fund led by investor Warren Buffett.
RedFin Capital raised $500 million from a $1 million Series A round in 2015.
RedFlys, RedLovers, RedFalls, Redfolds, RedFlyers, Redflyer, Red Flies, Redflies and RedFlyer Properties are the three companies that raised more money from crowdfunding than any other company in the United States in 2017, according VentureBeat.