$7.5M bankruptcy at Hell’s Kitchen condo renovation project

Property owner Fang Zou filed for chapter 11 bankruptcy protection in Manhattan yesterday to halt a UCC foreclosure auction of the condominium development project at 343 West 47th Street in Hell’s Kitchen, Manhattan, set for the same day, July 11, 2023.

The property is owned through the entity Midtown West 47 ST LLC, which was not a party to the bankruptcy. Fang Zou filed four bankruptcy petitions yesterday, one for each of the entities that hold an equity stake in Midtown West 47 ST LLC, and the case Soha House LLC is set to be the lead case.
Petition LINK
Case LINK

According to the bankruptcy petition, “In or around March 2018, [Zou] purchased the Property for approximately $6,000,000. Then, in December 2019, [Zou] refinanced its first mortgage on the Property with 5 Arch Funding Corp. (“5 Arch”).

“The refinance with 5 Arch was intended to allow the Debtors to pay off their initial closing loan and provide construction financing for a redevelopment of the Property into a luxury condominium building. The Debtors eventually began to initiate the redevelopment project for the Property in 2020, but were met with continuous roadblocks by the community board, the City Planning Board and ensuing complications caused by the Covid-19 Pandemic.

“In or around October and November of 2022, the Debtors submitted their revised redevelopment plans to the City Planning Board and the community board, who each forthwith approved construction.

“Unfortunately, during this interim period, 5 Arch assigned its mortgage to CAF Bridge Borrower MS LLC [CoreVest American Finance Lender], who immediately attempted to foreclose on the Debtors’ interests in Midtown due to their secured guaranty of Midtown’s defaulted loan.

“The redevelopment project for the Property is only 5% complete. The Property is currently in the demolition phase, with every floor gutted and vacant. The Property has forced place insurance, and its premiums are paid by 5 Arch and now, assumingly, CAF With the Property now ready for redevelopment, the Debtors have been actively pursuing takeout and construction financing, but CAF ultimately scheduled a UCC sale of the Debtors’ membership interests in Midtown for July 11, 2023 at 2:30 PM. This in turn led to the Debtors for filing for Chapter 11 protection on the Petition Date prior to the scheduled sale time.

“The Debtors are actively seeking a refinance and construction loan and intend to achieve this within the first 90 days of the Chapter 11 Cases. To that end, in addition to the efforts of Debtors’ proposed counsel, the Debtors are in the process of retaining Greg Corbin’s North Point Real Estate Group [sic] to assist in the marketing and hopeful refinance and development of the Property, which will result in a satisfaction of CAF’s claims in full.”

The other entities are Soteria Real Property LLC, WCJ Fund LLC and 536 West 150 Street LLC.

Direct link to the property’s ACRIS page and link to DOB NOW portal.