Magazine article American Banker

New York Developer Files for Bankruptcy: 'Prepackaged' Deal Arranged with Swiss Bank May Be Largest to Date

Magazine article American Banker

New York Developer Files for Bankruptcy: 'Prepackaged' Deal Arranged with Swiss Bank May Be Largest to Date

Article excerpt

New York Developer Files for Bankruptcy

The owner of a 1.3 million-square-foot New York office tower filed for protection under the Bankruptcy Code last week, listing nearly half a billion dollars of debt and only half that much in assets.

The result of negotiations with a bank group led by Swiss Bank Corp., it appears to be the largest "prepackaged" single-asset real estate bankruptcy ever filed.

In a prepackaged bankruptcy, a company obtains approval for a reorganization plan when it files for Chapter 11.

The Stage Is Set

The filing sets the stage for a similar restructuring by the same developer of a nearby project that was financed by a group led by Citicorp, sources said.

The petition by 1585 Broadway Associates, a partnership controlled by Solomon Equities, lists $482 million of debts, which includes about $400 million of mortgages held by eight foreign banks.

Bank of Montreal and Toronto Dominion Bank are coagents with Swiss Bank in the mortgages.

Unsecured debt includes a $40 million claim by European American Bank and a $17.5 million claim by Commercial Bank of Kuwait.

The petition lists $231 million of assets, including the $200 million "book value" of the building and land.

Banks Sought Receiver

Solomon filed after the banks foreclosed and sought the appointment of a receiver to manage the building, one banking source said.

In the petition in U.S. Bankruptcy Court for the Southern District of New York, developer David S. Solomon blamed the "prolonged collapse" in the local real estate market for the problems at the building. …

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