The Real Deal New York

Developer in deadly Turtle Bay crane collapse could lose home to foreclosure

HSBC says James Kennelly defaulted on co-op loan

January 23, 2013 05:30PM
By David Jones

The site of the 2008 crane collapse

Developer James Kennelly is facing a new round of legal woes, as a bank has filed suit to foreclose on his co-op apartment on East 52nd Street, just steps from the site of the deadly 2008 crane collapse at his residential tower project in Turtle Bay. HSBC, the loan trustee, filed suit in New York State Supreme Court — alleging that in August 2010, Kennelly defaulted on a $441,900 loan on an apartment at 304 East 52nd Street. Lawyers for HSBC are asking that the shares in the co-op be sold if the case proceeds to formal judgment.

Kennelly first acquired a third-floor unit at the four-story building for $600,000 in March 2006, Propertyshark records show. The next month, he acquired a second-floor unit for $325,000 and, several months later, a fourth-floor unit for $738,000. The initial unit was registered under his Kennelly Development firm.

The original loan was taken out in March 2007, about 12 months before the crane collapsed at 303 East 51st Street, killing seven pedestrians and injuring more than two-dozen others.

The site was shut down after the accident and languished for years on the corner of Third Avenue. However, construction has resumed under new ownership and a new site plan. HFZ Capital, led by Ziel Feldman, took over the site at auction and is working on a new development plan with funding from CIM Group.

Crane operator William Rapetti was acquitted in 2010 of manslaughter charges in the crane-related deaths, but he did lose his license to operate a crane in New York.

Neither Kennelly nor HSBC were not immediately available for comment.

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