Argent, Vornado break Times Square hotel deadlock with bankruptcy plan, $419M in senior debt

Andrew Penson’s Argent Ventures and Vornado Realty Trust broke a long-running dispute over control and management of the Crowne Plaza Hotel, office, retail and signage at 1601 Broadway in Times Square, by filing a 63-page bankruptcy plan that envisions a potential sale of the asset. The filing notes Argent holds $418.8 million in senior debt, as well as a defaulted $80 million mezzanine loan.

The filings noted that to clear a path for the agreement, the Argent Ventures through the entity 1609 Broadway LLC yesterday purchased the leased fee of a 2,185-square-foot parcel previously owned by the Riese family for an undisclosed amount. With that purchase, the debtors control the entire fee interest, significantly reducing the ownership uncertainty. Argent purchased the Walber fee position, with about 11,000 square feet of the parcel, May 3, 2022 from SL Green Realty for $121 million. Vornado owned the balance of the fee.

Most of the fee is owned by Vornado Realty Trust affiliated entities, but those entities ceded management control to Argent Ventures after Penson’s company bought the defaulted mezzanine debt from Apollo Global Management and then exercised the management control option.

The bankruptcy plan envisions a sale of the property in short order, in under 40 days, with Eastdil Secured as the broker managing the marketing and sale.

The text below in italics includes excerpts from the various bankruptcy documents. The main filing url is here.

1601 Broadway reorg plan

1601 Broadway disclosure statement

THE DEBTOR’S CORPORATE STRUCTURE: The Debtors are organized as member-managed limited liability companies under Delaware law. Non-Debtor Times Square Mezz Borrower is the sole legal and beneficial owner of 100% of the issued and outstanding limited liability company membership interests in Debtor TSJV, which itself is the sole legal and beneficial owner of 100% of the issued and outstanding limited liability company membership interests in Debtor 1601 Broadway Holdings, which itself is the sole legal and beneficial owner of 100% of the issued and outstanding limited liability company membership interests in Debtor 1601 Broadway Owner. Vornado Realty, L.P. and Vornado Realty Trust (together, “Vornado”) which own, manage and develop office real estate principally in New York City, including the Hotel, and are the ultimate indirect majority parent entities of all the Debtors and nonDebtor Times Square Mezz Borrower. Richard J. Shinder is the President, Treasurer and Director of Debtor TSJV. Non-Debtor CPTS Mezz Borrower is the sole legal and beneficial owner of 100% of the issued and outstanding limited liability company membership interests in Debtor CPTS and, as noted above, Vornado is the ultimate indirect majority parent of Non-Debtor CPTS Mezz Borrower. Richard J. Shinder is the President, Treasurer and Director of Debtor CPTS.

The original principal amount of the Mezzanine Loan was $80 million. On April 23, 2018, Original Mezzanine Lender sold the entire Mezzanine Loan to a group of affiliated lenders (collectively, “Apollo”).The parties entered into an amendment to the Mezzanine Loan Agreement, which, among other things, extended the maturity of the Mezzanine Loan to July 9, 2020. The Mezz Borrowers were unable to repay the principal balance of the Mezzanine Loan upon maturity on July 9, 2020, triggering a further automatic event of default. On March 18, 2021, despite the defaults under the Mezzanine Loan, an affiliate of Argent, the Mezzanine Lender, purchased the Mezzanine Loan from Apollo and assumed the rights and obligations of Apollo as lender thereunder. As a result of the defaults under the Mezzanine Loan Agreement, on September 1, 2021, the Mezzanine Lender exercised its rights pursuant to the Mezzanine Security Agreement to exercise the voting rights the Mezz Borrowers held with respect to Debtors TSJV and CPTS.

Since on or about July 2020, Debtors TSJV and CPTS have been unable to make payments under the Mortgage Loan as they became due. As of the Petition Date, approximately $$418,726,016 in total of principal, accrued interest and fees is outstanding under the Mortgage Loan Agreement.

Mechanics’ Liens As of the Petition Date, there are certain mechanics’ liens outstanding with respect to the Hotel totaling $746,283.50.

Unsecured Debt As of the Petition Date, the Debtors’ consolidated unsecured debt obligations totaled approximately $4,237,094.46.

Additionally, pursuant to a New York City-wide arbitration award issued by the Office of the Independent Chairperson dated September 11, 2020 (the “Award”), all union hotels in New York City were directed to pay severance to union associates laid off as a result of the Pandemic. The Hotel’s total severance liability under the Award was $7,450,452.00, which included severance to employees ($6,773,138.00), benefit fund contributions on severance ($1,693,285.00), and payroll taxes ($677,314.00). The Award also required the Hotel to pay a series of monthly payments, totaling $3,890,862.50, to the Union health fund, which was used to provide laid off employees with healthcare coverage during the period the Hotel was closed. Vornado and/or the Original Lenders paid all or the majority of the amounts due under the Award. Furthermore, pursuant to a local law enacted by the New York City Council on or about September 20, 2021 (the “Local Law”), the Hotel was required to pay an additional $500 per week in severance to associates (up to $15,000 per associate). The Hotel’s total liability under the Local Law was $5,247,000.00, of which Argent, Vornado (defined below), and Highgate agreed to each pay one third of the total pursuant to a separate agreement.

The Debtors entered into a restructuring support agreement (the “RSA”) with Vornado Capital Partners, L.P., Vornado Capital Partners Parallel, L.P. and Argent (collectively, the “RSA Parties”).
After extensive discussions, on December 28, 2022, the RSA Parties executed the RSA regarding the material terms of a chapter 11 filing that would conclude in a sale transaction or restructuring. The RSA Parties have agreed to support the restructuring transactions set forth in the Chapter 11 Plan, which was filed contemporaneously herewith. Among other things, the Mortgage Lender agreed to permit the Debtors to use cash collateral on a consensual basis and to provide post-petition financing to enable the Debtors to implement their restructuring process through confirmation of the Chapter 11 Plan, including to commence a marketing process for the sale of all or substantially all of the Debtors’ assets through the Chapter 11 Plan or separately under section 363 of the Bankruptcy Code.

1605 Broadway LLC (in such capacity, the “DIP Lender”) shall provide DIP financing in the amount of up to $10,000,000, subject to the Bankruptcy Court’s entry of an order approving such DIP financing (the “DIP Order”).

The RSA also requires the Debtors to file certain documents and satisfy certain objectives (“Milestones”) within a specified period of time. …select a stalking horse bidder, if any, for a sale of the Premises and related assets no later than twenty-eight (28) days after the Petition Date… (vii) commit to a bid deadline no later than thirty-five (35) days after the Petition Date, (viii) conduct an auction, if necessary, no later than two (2) business days after the bid deadline,

Retention of Debtors’ Professionals The Debtors intend to file applications to retain the following professionals in the Chapter 11 Cases: (i) Seward & Kissel LLP as bankruptcy counsel; (ii) Emerald Capital Advisors as financial advisor; (iii) Eastdil Secured, L.L.C. as broker; (iv) Meister Seelig & Fein LLC as landlord-tenant counsel; and (v) Stretto, Inc. as claims and noticing agent.The Debtors have retained Eastdil Secured, L.L.C. (the “Broker”) to run a public marketing process for the Property and related assets (collectively, the “Assets”). The Broker was retained on December 2, 2022, and has commenced a marketing period that will run through the Bid Deadline. The Debtors encourage any party with interest in purchasing the Assets to contact the Broker.

…the reorganized Debtors have agreed to assume the Collective Bargaining Agreement with respect to the Hotel employees and, in the case of a sale to a third party, the Debtors have agreed to require parties bidding on the Debtors’ assets to similarly agree to assume the Collective Bargaining Agreement.

Debtors, on November 1, 2022, reopened the Hotel and have been steadily resuming business operations.

The Plan allows the Debtors to choose either a successful bidder identified through the Debtors’ proposed marketing process, which seeks a purchaser of either the Property or the Debtors’ Franchise Right (or both), or, if no such bidder exists (or if only for the Franchise Right), an equitization restructuring supported by the Prepetition Secured Party. After exploring various strategic options, the Debtors determined that the restructuring transactions contemplated in the RSA were in the best interests of the estates.
On December 23, 2020, the Prepetition Secured Party purchased the Mortgage Loan from the Original Lenders, at which time the principal balance due under the Mortgage Loan was $195 million in addition to accrued interest of approximately $7.6 million. In April and May of 2022, the Prepetition Secured Party advanced an additional $121,333,753.37 under the Mortgage Loan to enable Debtor TSJV to pay a deposit and thereafter to consummate the purchase of the Walber Fee Parcel (the “Walber Purchase Advances”). Thereafter, the Mortgage Loan Agreement was amended to reflect the Walber Purchase Advances and to add Debtor 1601 Broadway Owner, the direct owner of the Walber Parcel, as a borrower solely with respect to the Walber Purchase Advances.
13. Additionally, since December of 2021, the Prepetition Secured Party has made a series of additional advances under the Mortgage Loan given the Debtors’ inability to meet the monthly operating expenses of the Premises. Specifically, the Mortgage Lender funded a total of $7,241,728.09 from December 23, 2021 through October 31, 2022.
As of the Petition Date, approximately $418,726,016 in principal, accrued interest and fees is outstanding under the Mortgage Loan Agreement.


On May 3, 2022, the Debtor paid $121 million for the Walber fee position, which Walber had sold in 2021 to SL Green Realty. After litigation in New York State Supreme Court in which Debtor argued it had a right of first refusal to buy the stake, SL Green was forced to sell it to Debtor.

On December 28, 2022, 1609 Broadway successfully acquired the Riese Fee Parcel. As part of this purchase, the Debtors were released of all claims and obligations owed to Riese and the lawsuit will have been resolved. As a result of this transaction, significant uncertainty and litigation with respect to the Riese Fee Parcel and the Premises in general have been removed.

The Premises currently has three office space tenants, Association for Computing Machinery (“ACM”), American Management Association (“AMA”), and Open Jar Studios (“Open Jar” and together with ACM and AMA, the “Office Tenants”). The monthly rent for the Office Tenants totals approximately $502,609.
Additionally, the Premises host four retail tenants (the “Retail Tenants”), including Krispy Kreme, BHT 161 Broadway, 1601 Enterprises, and Crowne Garage LLC. The monthly rent for the Retail Tenants totals approximately $634,984, and the earliest lease expires at the end of 2022, with the next earliest expiring in 2030. Two of the Retail Tenants have been in default under their respective leases.

The day-to-day operations of the Premises, including the Hotel, are managed by Highgate Hotels, L.P. 2 Prior to November 2021, Vornado (as defined below) was responsible for managing the non-Hotel portions of the Premises pursuant to a prior management agreement (the “Former Management Agreement”).

The Hotel is currently operating as a “Crowne Plaza” hotel, a brand under the InterContinental Hotels Group portfolio (“IHG”), pursuant to the Crowne Plaza License Agreement (the “License Agreement”) between Debtor CPTS and Holiday Hospitality Franchising LLC (“Holiday”) dated July 1, 2012. Debtor TSJV is not a party to the License Agreement. As discussed below, the branding of the Hotel under the “Crowne Plaza” flag pursuant to the License Agreement, has constrained the success of the Hotel and prevented the Debtors from generating the revenue required to meet the Hotel’s obligations. The License Agreement has an initial expiration date in March 2027 and Holiday (but not Debtor CPTS) has an option to renew for a renewal term that would expire in November 2036.

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