The Real Deal New York

Veteran trust attorney named receiver at Rector Square

February 25, 2009 02:04PM
By David Jones

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A New York State Supreme Court judge last night issued an order naming veteran estate and trust attorney Michael Miller as the receiver in the foreclosure case against Rector Square condominium in Battery Park City.

Miller, a veteran receiver and former president of the New York County Lawyers Association, was nominated late Friday by Judge Joan Madden to take charge at the troubled condo at 225 Rector Place. Miller took a few days to accept the appointment, citing the complexity of the case and the poor conditions at the building.

“I was just blown away by the conditions,” Miller said. “It’s just hard to believe that people were living in a building with no intercom, as a basic safety concern.”

Miller said he walked through the building on Saturday with his wife, and found exposed wiring, unfinished construction and other problems in the building. As The Real Deal previously reported, construction halted at the building in December, when Levy ran out of funds.

Miller said he wanted to make sure he would have the resources available to fix the problems at Rector Square. He said lawyers for the senior lender, Anglo Irish Bank, promised to provide $2 million to complete construction of the building’s common areas.

As receiver, Miller will collect rents from tenants and common charges from residents at Rector Square and is interviewing candidates to take over as the new property manager. During the last downturn in the 1990′s, Miller was a receiver for a high-end condominium and a commercial building with more than one million square feet of office space, but declined to name the properties.

Miller said he will demand that Levy be liable for common charges on the unsold units at Rector Square, however attorneys for Levy said that he has no money, according to Miller and other officials.

Sources say that Anglo Irish officials cannot account for how Levy used the money, as there appears to be a mystery about why his funding ran out in December. As The Real Deal reported earlier, Levy is also facing $3.2 million of dollars in mechanic’s liens at Columbus Green, another condo conversion at Park Columbus, a condo at 101 West 87th Street.

He is still working to obtain a surety bond, which is required for receivers or estate guardians to protect against theft or other misuse of funds.

The foreclosure marks one of the largest and most complicated foreclosure cases in New York City history, involving a Dublin, Ireland-based lender that has just been nationalized, a developer that is facing lawsuits in multiple buildings and an edifice that includes a mix of condo unit owners, affordable housing tenants and a ground lease controlled by the Battery Park City Authority.

The Wall Street Journal reported on Wednesday that police raided Anglo Irish’s Dublin headquarters, amid a national probe into whether the bank took secret bank deposits to mask financial losses. Anglo Irish Bank filed suit to foreclose on Rector Square earlier this month after developer Yair Levy defaulted on $165 million in loans.

Judge Madden’s decision follows a large crisis session on Friday at the offices of State Assembly Speaker Sheldon Silver. Political leaders from around the borough huddled with lawyers for buyers and existing tenants amid concerns that utilities would be shut off after Levy allegedly defaulted on payments to the Battery Park City Authority.

At least 15 buyers filed complaints with Attorney General Andrew Cuomo’s office earlier this month, alleging that the sponsor failed to disclose key financial information about the building, that the building was used for Marriott ExecuStay hotel rooms and that several apartments were used for college dorm rooms.

Ken Demario, chief of the state Attorney General’s Real Estate Finance Bureau, is scheduled to meet with key officials tomorrow about the case.

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