Swig warns of bankruptcy if Square Mile moves on judgment

By David Jones | September 22, 2009 06:24PM

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Kent Swig warns of bankruptcy on Sheffield57

Developer Kent Swig warned that he would file for personal bankruptcy protection if a $28 million judgment on a defaulted loan from Square Mile Capital connected to Sheffield57 was enforced against him, according to court filings obtained by The Real Deal.

“I do not have access to $28 million in cash or liquid assets, and if the judgment is enforced against me at this time, I will likely have to file for personal bankruptcy protection,” Swig said in an affidavit filed Sept. 15. “This will entail severe financial consequences not only for me, but for my family, my business and my employees.”

He added: “This default will likely trigger banks to call in my lines of credit, cutting off the capital flow to my business and effectively triggering its complete collapse.”

Swig would be one of the biggest developers in recent history to file for personal bankruptcy. Swig is president of Swig Equities and one of the most important commercial developers in New York City. Since 2001, Swig has purchased or developed more than 4 million square feet of commercial office space and 1.5 million square feet of residential space. He is also co-owner and co-chair of Terra Holdings, parent of residential brokers Brown Harris Stevens and Halstead Property.

After losing control of Sheffield57 to a foreclosure by Fortress Investment Group and 25 Broad Street to a foreclosure by Lehman Brothers, Swig is in personal jeopardy on several financial fronts.

As previously reported by The Real Deal, he faces litigation on a $5 million credit line from Citibank, a $4.75 million note from Signature Bank and a $50 million judgment from Lehman Brothers for mezzanine loans for his condo project at 25 Broad Street.

Square Mile originally sued Swig in January after he defaulted on a $21.15 million personal loan to help finance the development of Sheffield57, the luxury condominium project near Columbus Circle, where Swig was the managing partner.

Square Mile is expected to go to trial later this year against Swig on a second $18.5 million loan, related to the 25 Broad Street development, in which Swig also allegedly defaulted.

Attorneys for Square Mile were not immediately available for comment.