Developer Harry Macklowe, who leads Macklowe Properties, filed a petition yesterday in the Eastern District of U.S. Bankruptcy Court, to halt a UCC foreclosure auction set for the same day, October 11, 2023, that was going to sell three apartment units, 78A, 78B and 28H.
Macklowe was the original developer of 432 Park Avenue but was forced to cede control to CIM Group, which ultimately completed the project. Macklowe claims he is due significant profit payments, as much as $110 million, from CIM Group, but they have not paid him, as PincusCo first reported in June. He is battling them in arbitration over that issue.
Northgate Real Estate Group’s Greg Corbin was set to auction the properties yesterday, according to The Real Deal which first reported the bankruptcy.
According to Macklowe’s bankruptcy petition, “The entities own FR-AM One LLC along with 432 FF&E LLC (432 Owner), together own three luxury apartments in the building at 432 Park Avenue, New York, NY (the “Property”) identified as units 78B and 28H (owned by FR-AM One) and 78A (owned by 432 Owner).
“I am a Florida resident. Because the Debtors have no active business offices, the Debtors have venued their cases in the Eastern District of New York in care of my home in East Hampton, NY. I also maintain a home in one of the Units (78B).
“In view of the foregoing, it is alleged in the Arbitration that the Debtors are owed substantial unpaid revenues and distributions amounting to tens of millions of dollars and potentially aggregating more than the underlying mortgage debt. Unfortunately, the Debtors were unable to obtain a stay of the Article 9 UCC foreclosure sales pending completion of the Arbitration, based upon, inter alia, a ruling that the Lender, although affiliated or related to the CIM Fund as co-developer and otherwise part of the CIM Group, did not sign the operative CPPA or amendment and, therefore, was not bound to participate in the Arbitration. Hence, the litigation is proceeding piecemeal without the benefit of any stay in the state court…
“The Debtors intend to continue with the Arbitration, which is scheduled to be heard in March, 2024. There have been no payments received under the CPPA except an advance of $15 million, which was reduced to $12,500,000, event though it is my belief that the CIM Fund has realized approximately $900 million on the project…The Debtors intend to pursue a reorganization strategy predicated upon the refinancing of the Units perhaps in connection with a sale of Unit 78A. The purpose of a refinancing or sale is to generate a pool of funds of approximately $30 million to be set aside for the Lender while the Debtors pursue claims in the Arbitration. The Units themselves have very little mortgage debt and are believed to have an aggregate value of approximately $78 million.”
Direct link to the property’s ACRIS page.