Lehman Brothers’ bankruptcy has caused another headache for Swig Equities’ stalled condominium conversion project in the Financial District — a dearth of funds to pay contractors.
Nova Development Group, of New Brunswick, NJ, which provided asbestos abatement at 25 Broad Street and Exchange Place, filed a lawsuit in Manhattan State Supreme Court October 10, seeking $764,100 for work done between February and July this year, according to the complaint.
Earlier this month, Swig Equities said it had suspended sales at the project, citing Lehman Brothers’ bankruptcy. Lehman Brothers Holdings, which filed for bankruptcy protection September 15, was a major funder of the planned conversion of the office building to a 346-unit condo.
Nova Development Group filed the lawsuit seeking payment from Swig Equities’ 25 Broad LLC and the contractor who hired Nova for the project.
Swig Equities said in a statement that it expected more subcontractors and contractors to file mechanic’s liens against the building because Swig’s funding from Lehman Brothers has been halted, rendering the developer unable to pay the contractors.
“Due to the effect of the Lehman bankruptcy, the construction loan funds for 25 Broad are frozen and it is anticipated that liens may be filed while the Lehman bankruptcy is pending,” the company said through a spokesman. “As soon as 25 Broad’s operating accounts are unfrozen, the project expects that all outstanding invoices will be paid in the normal course of business.”
Ronald Steinvurzel, the attorney representing Nova, recognized that Lehman Brothers had suspended funding for 25 Broad Street, but said Nova wanted to file its legal action to make certain it would be paid down the line.
“The financing fell through, which is par for the course in today’s economy,” Steinvurzel said, adding, “We had given as much time as possible to the owners. But you have to file your lien to preserve your rights.”