Real-estate investor HFZ Capital Group filed its Chapter 11 plan of reorganization for One Madison Park, pledging up to $200 million to take the Manhattan condominium tower out of Chapter 11 protection, according to an article yesterday by Jacqueline Palank at marketwatch.com, a part of The Wall Street Journal digital network.
"HFZ is teaming up with fellow real-estate investor CIM Group to sponsor the plan, a right they won at an April auction after no other bids were put forward. According to court papers, they'll provide the new funding to pay off One Madison's creditors in exchange for 100% ownership of the project, a glass-walled, 50-story tower that stalled out during the economic downturn," the article said.
"Under the plan, lender iStar Financial Inc.'s claim of more than $230 million would be split into two components. A secured component of $162 million would be replaced with a new $162 million secured note that will mature seven years after One Madison exits bankruptcy. Another portion of approximately $69 million would be deemed unsecured and would possibly be waived," the article said.
"General unsecured creditors owed between $160 million and $180 million would recover between three and five cents of every dollar they're owed, as long as they vote in favor in the plan and iStar waives its $69 million unsecured claim. If not, iStar's claim will be included with theirs, reducing unsecured creditors' recoveries to about two to three cents on the dollar. All existing equity, including majority owner and manager Slazer Enterprises LLC, will be canceled, and holders aren't slated to receive anything under the plan, which is subject to court approval," the article continued.
The article noted, however, that before the plan was filed Wednesday with the U.S. Bankruptcy Court in Wilmington, Delaware, Amalgamated Bank, which says it put up $90 million of the $240 million project loan as a junior lender, said the plan "substantially undervalues" the property and would pay iStar in full while leaving "virtually nothing" for Amalgamated.
It is Amalgamated's portion of the debt that is unsecured and could therefore be waived, the article continued, adding that "last week, Amalgamated said it notified iStar that it planned to exercise its right to buy out iStar's senior debt in the hopes of gaining a seat at the negotiating table.
"The debtors therefore face a very simple choice at this point in these cases - they can either elect to engage Amalgamated in negotiations over the terms of a plan that will maximize the value of their estates, or they can pursue their current path of seeking to pursue a plan that undervalues the debtors and seeks to transfer ownership of the debtors' assets to the 'bidder' selected in a backroom deal," the bank wrote in court papers filed Tuesday.
The Wall Street Journal, citing several people familiar with the matter, reported Wednesday that developer Related Cos. was working with Amalgamated on its plan to buy out iStar's stake, the article said.
Of One Madison's 69 residential units, 49 are ready for occupancy, and buyers have closed on 12 of those units. The remaining 20 units are unfinished, as is a 9,000 square-foot amenity space that will feature a lap pool, the article said.
"HFZ is teaming up with fellow real-estate investor CIM Group to sponsor the plan, a right they won at an April auction after no other bids were put forward. According to court papers, they'll provide the new funding to pay off One Madison's creditors in exchange for 100% ownership of the project, a glass-walled, 50-story tower that stalled out during the economic downturn," the article said.
"Under the plan, lender iStar Financial Inc.'s claim of more than $230 million would be split into two components. A secured component of $162 million would be replaced with a new $162 million secured note that will mature seven years after One Madison exits bankruptcy. Another portion of approximately $69 million would be deemed unsecured and would possibly be waived," the article said.
"General unsecured creditors owed between $160 million and $180 million would recover between three and five cents of every dollar they're owed, as long as they vote in favor in the plan and iStar waives its $69 million unsecured claim. If not, iStar's claim will be included with theirs, reducing unsecured creditors' recoveries to about two to three cents on the dollar. All existing equity, including majority owner and manager Slazer Enterprises LLC, will be canceled, and holders aren't slated to receive anything under the plan, which is subject to court approval," the article continued.
The article noted, however, that before the plan was filed Wednesday with the U.S. Bankruptcy Court in Wilmington, Delaware, Amalgamated Bank, which says it put up $90 million of the $240 million project loan as a junior lender, said the plan "substantially undervalues" the property and would pay iStar in full while leaving "virtually nothing" for Amalgamated.
It is Amalgamated's portion of the debt that is unsecured and could therefore be waived, the article continued, adding that "last week, Amalgamated said it notified iStar that it planned to exercise its right to buy out iStar's senior debt in the hopes of gaining a seat at the negotiating table.
"The debtors therefore face a very simple choice at this point in these cases - they can either elect to engage Amalgamated in negotiations over the terms of a plan that will maximize the value of their estates, or they can pursue their current path of seeking to pursue a plan that undervalues the debtors and seeks to transfer ownership of the debtors' assets to the 'bidder' selected in a backroom deal," the bank wrote in court papers filed Tuesday.
The Wall Street Journal, citing several people familiar with the matter, reported Wednesday that developer Related Cos. was working with Amalgamated on its plan to buy out iStar's stake, the article said.
Of One Madison's 69 residential units, 49 are ready for occupancy, and buyers have closed on 12 of those units. The remaining 20 units are unfinished, as is a 9,000 square-foot amenity space that will feature a lap pool, the article said.
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
6sqft delivers the latest on real estate, architecture, and design, straight from New York City.
