The Real Deal New York

One Mad. rescue plan slated within 2 weeks

By David Jones | June 02, 2011 06:55PM

The developers of the One Madison Park condominium said they expect to formally submit an official rescue plan for the troubled project within the next two weeks, according to federal bankruptcy court documents obtained by The Real Deal.
The developers, including Ira Shapiro and billionaire investor Cevdet Caner, have been
negotiating with HFZ Capital’s Ziel Feldman on a plan to buy the luxury tower, which is at 23 East 22nd Street, for $165 million, plus pay more than $40 million to complete construction on the building.

“Substantial negotiations regarding a plan have taken place over the past six weeks and the parties have made significant progress in narrowing the open issues,” wrote attorney Erin Fay, who represents the developers. They wrested control of the project from Shapiro earlier this year. “The debtors anticipate receiving committee comments to the draft plan and wrapping up negotiations on the remaining open issues within a week or two.”

Besides more than $200 million in mortgage debt owed to iStar Financial, the debtors face millions in claims from other private investors, contractors, adjacent developers and buyers that are under contract for an apartment.

Creditors and other officials connected to the project have been reviewing a draft proposal by HFZ in recent weeks, but the process has dragged on for several months, leaving the completion date of the luxury tower up in the air. Sources told The Real Deal on April 28 that a final rescue plan was expected within a week.

“It’s taking us longer than I think everybody had hoped,” said attorney Derek Abbott, who along with Fay represents the developers, which also include GreenBridge Capital, the company that wrested control over the project from lead developer Ira Shapiro .

At an April 13 auction HFZ acquired the debt at One Madison Park and later submitted a $10 million deposit into an escrow fund. As The Real Deal previously reported, sources familiar with the deal say that HFZ has been in talks with CIM Group about financing the One Madison project. A final agreement would not only require paying iStar Financial to cover the senior loan, but working out a schedule to pay creditors and complete sales at the property, which already has about a dozen buyers living in their apartments.

Feldman declined to comment.

A hearing is scheduled for July 14 in U.S. Bankruptcy Court in Wilmington, Del.

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