Delshah files consensual $30M bankruptcy for Meatpacking retail

UPDATED 9:50 a.m., May 9, 2025: Michael Shah’s Delshah Capital filed two related bankruptcy petitions yesterday under chapter 11, with the consent of the special servicer for the defaulted, securitized $28 million loan covering 58-60 Ninth Avenue and 69 Gansevoort Street in the Meatpacking District in Manhattan, which combined are valued at $30 million.
The special servicer for the loan filed a pre-foreclosure action in July 2024 in federal court in Manhattan, as PincusCo first reported.
The bankruptcy filings were made with the agreement of the lender, according to Delshah Capital. Prior to this, the lender representatives and Delshah executed a settlement in that foreclosure case, and it was subsequently dismissed last month.

Delshah Capital CEO, Michael Shah, said in an email to PincusCo that his firm has been working with the special servicer on a resolution since the loan matured.

“We were able to secure two separate end users as purchasers and made a deal with the servicer whereby we sell the properties now in a bankruptcy, paying the servicer principal and interest, contribute an additional $2 [million] and keep the $7 [million] Free People judgment.”

The bankruptcy filings do not include the plans for the disposition of the properties. Delshah is seeking joint administration for the properties under the 58-60 Ninth Avenue action. The prepackaged bankruptcy documents are expected once the joint administration is confirmed.

58-60 Ninth Avenue Petition LINK
58-60 Ninth Ave Petition pdf
Terminated foreclosure action 1:24-cv-05421 LINK

The petition values the real estate at 60 Ninth Avenue at $21 million, and the real estate at 69 Gansevoort Street at $9 million for a total of $30 million. On top of that, Delshah claims $6.7 million in additional assets through a judgment against retailer Free People, a former tenant at 60 Ninth Avenue. The liabilities for both properties are set at $28.6 million.

Retail property values have generally declined from 2017, when this loan was given, and interest rates are much higher, making refinancing more challenging.

Delshah Capital was able to sell a nearby property that was also under financial pressure. It sold the hotel 55 Gansevoort to RH, the former Restoration Hardware, for $57.7 million as part of a structured deal through a bankruptcy.

According to source familiar with the litigation, the properties have been in distress since tenants vacated each location. Free People exited its lease at 60 Ninth Avenue and J. Crew filed for bankruptcy in May 2020 and vacated its location at 69 Gansevoort Street. Delshah re-leased 60 9th avenue to Chelsea Wines, and according to a source, they quickly defaulted on their lease and never fully opened.

“[Delshah] received an extension proposal from the lender that [Delshah] found uneconomical with the properties continuing to remain vacant. That being said, [Delshah has] made significant progress working with K-Star and expect[s] to reach an amicable resolution with a full lender payoff,” the source said.

Delshah Capital bought 69 Gansevoort Street, located between Washington Street and Ninth Avenue, for $8.6 million in August 2012, and eight months later bought 58-60 Ninth Avenue for $18.2 million in April 2013.

Then on August 4, 2017, Cantor Commercial Real Estate lent Delshah Capital $28 million secured by these properties, after which the loan was securitized. In addition, 60 Ninth Avenue was the subject of a state, then federal civil action related to nonpayment of rent during Covid by Free People, a subsidiary of Urban Outfitters.

Direct link to the property’s 58-60 Ninth Avenue ACRIS page
Direct link to the property’s 69 Gansevoort Street ACRIS page

UPDATED with comment from Delshah Capital.