20 Bayard condo files for Chapter 11December 04, 2009 07:30PM By David Jones
According to documents filed in U.S. Bankruptcy Court in Brooklyn, the condo by North Development Group owed more than $10 million to more than 50 creditors.
The reason for the filing was unclear, however bankruptcy is often used by developers to prevent a property from being foreclosed on. Records with the city Department of Finance show that Istar Financial inherited the building loan from subprime lender Fremont Bank. However, court documents show that Manhattan-based hard money lender W Financial among the listed creditors.
The creditor with the largest unsecured claim was Add Plumbing, a contractor at 120 Evergreen Avenue in Brooklyn. The claim was for $325,000.
North Development Group had previously parted ways with the Developers Group and Prudential Douglas Elliman at the Karl Fisher-designed property, after the brokers argued for lower sales prices at the building. Streeteasy data shows units have been selling for $825 per square foot.
After selling about 50 percent of the 64-unit building, the developer began offering apartments for rent, officials said.
"We sold close to half the building, then we had differences with the developer and we parted ways," said Lior Barak, a senior vice president at Elliman, who represented the building in 2007.
Unit owners at the building were shocked at the move, because there were no visible signs that the building was in the amount of distress that would force a bankruptcy filing.
"If anything, that's what is such a surprise," said Robin Ottoway, a unit owner who bought his apartment in August 2008. "Any problems that we had they came up and they fixed."
Ottoway said the building is nearly full of either unit owners who closed on their apartment contracts or renters, who have moved in since earlier this year.
However, attorney Rob Braverman represented a buyer who filed with the New York State Attorney General in 2008 to get out of a contract at the building. Braverman said the case stemmed from an alleged mold problem at the property. He said the case was settled about two months ago.
Porzio, Bromberg & Newman attorney John Mairo, one of the lawyers representing the North Development Group-controlled sponsor, 20 Bayard Views, in U.S. Bankruptcy Court, was not immediately available. The other attorney, Leslie Berkoff, of Morrit, Hock, Hamroff & Horowitz, was traveling and not scheduled to return until next week.
North Development, led by Isaac Hager, is facing litigation over a $17 million loan made to Kent Wythe 9th Street, another entity of Hager's created to develop a site at 421-431 Kent Avenue and 464-474 Wythe Avenue in Williamsburg.