The Real Deal New York

LI bank drops receiver bid in NYC foreclosure case

September 29, 2010 07:15PM
By David Jones

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From left: 529 West 48th Street, 317-319 West 35th Street, 534 West 50th Street

The Bank of Smithtown has withdrawn a motion to request a receiver at four Manhattan apartment buildings after the developer threw the properties into bankruptcy to prevent the lender from seizing them during a $3.8 million foreclosure proceeding.

The developer, Brooklyn-based 529 West 48th Street Realty, filed the four properties into Chapter 11 bankruptcy protection in August.

The Long Island-based lender filed suit in July after the firm, led by investor Allen Stein, allegedly defaulted on millions of dollars in loans and guarantees at the buildings.

In the suit filed in New York State Supreme Court, Bank of Smithtown alleged that the developer defaulted on a $3.8 million note at 529 West 48th Street in Manhattan. The developer also signed guarantees at three other apartment buildings: 317 West 35th Street, 319 West 35th Street and 534 West 50th Street, according to the complaint.

He said he previously filed suit against Bank of Smithtown alleging misconduct in connection with the foreclosure action.

The developer claims his financial problems were due to a combination of the economic downturn causing a number of tenants to default, higher-than-expected operating and renovation expenses, and misrepresentations made at the time when the developer bought the properties in June 2008, according to a Sept. 7 affidavit filed in U.S. Bankruptcy Court in Manhattan.

Stein claims that 317 West 35th Street has 15 residential and two commercial tenants, with a $3.8 million mortgage and an approximate value of $4.5 million. The remaining buildings are as follows:

The 319 West 35th Street building has seven residential tenants and two commercial tenants, a $2.2 million mortgage and an approximate value of $2.5 million.

The 529 West 48th Street building has 20 residential and one commercial tenant, a $3.6 million mortgage and an approximate value of $3.95 million.

The 529 West 50th Street property has 20 residential tenants, a $3.6 million mortgage and an approximate value of $4.25 million.

Stein declined to comment, and Bank of Smithtown officials were not immediately available for comment.

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