The Real Deal New York

Creditor urges judge to allow sales at Trevor Davis project

Zimco says senior lenders are holding up deals at 1055 Park Avenue

February 09, 2011 07:57PM
By David Jones

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Zimco Holdings, a creditor in the federal bankruptcy case of developer Trevor Davis, is urging the judge to allow court-supervised sales at 1055 Park Avenue, the luxury condominium building where it holds a $6 million loan, according to newly filed court documents.

In the documents filed today, Zimco asked Judge Shelly Chapman to allow sales to move forward, claiming that a pricing dispute with the building’s senior lender at 1055 Park Avenue at 87th Street is holding up potential deals.

“We‘d like the apartment sales to move forward,” Kevin Nash, lawyer for Zimco, told The Real Deal. “There’s an issue over current release prices. Under the mortgage documents the release prices are probably higher than what the market would bear.”

Zimco argued that prior to the Davis bankruptcy filing in December, it agreed that Prudential Douglas Elliman, who Davis hired as the third listing broker at the property, would be able to sell units at $1,600 per square foot. This would generate a sell out price of $24.1 million, which Zimco says would be enough to pay off the building’s senior debt and other creditors as well.

Elliman was able to sign a contract with a buyer for a 2,164-square-foot penthouse apartment for $3.8 million, or over $1,700 a foot, according to court filings. And, it has two other potential buyers interested. But, Zimco lawyers say the current senior lender is refusing to give its consent to the sales. Nash said a court hearing on the matter is scheduled for Feb. 17.

Zimco’s new filing is just the latest in a string of problems at the troubled project.

In October, Davis defaulted on his $16.3 million senior mortgage with Chicago-based Wrightwood Capital. The lender then sold the debt to an entity called Park Avenue 1055. Davis had argued that Wrightwood prompted the default by cutting off his funding, leading him to borrow the $6 million from Zimco to complete the building.

By early December, Davis worked out a deal with Zimco — which is led by Mikhail Kurnev, Coalco New York’s former president — to stop it from foreclosing. Shortly after that he filed for Chapter 11 and staved off another foreclosure by Zimco at the six-unit building.

But the new court documents show the senior lenders refused to allow sales to proceed at the lower sales prices, known as a “strike price” or the minimum price set by the lender to protect the commercial loan from going underwater.

Streeteasy.com records show the penthouse apartment was listed at $6.1 million by Elliman in August and the asking price was cut to $4.3 million in October. The Wall Street Journal reported late last month that brokers consider the unit that recently went into contract to be a “distressed” price.

As The Real Deal previously reported, Davis is also facing foreclosure at his wife’s apartment at the Empire Condominium and an upstate farm. He recently lost a separate project at Lexington Avenue and 65th Street, which is now controlled by the Toll Brothers.

Neither Davis nor his lawyer, Scott Markowitz, were available for comment. William Goldman, lawyer for the senior debt holder, declined to comment. Dina Lewis, the broker at Elliman, was not immediately available for comment.

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