The Real Deal New York

Noormand-affiliated entity files for Chapter 11 in bid to retain Hudson Yards site

Purchase of 402 West 38th in limbo
By E.B. Solomont | December 29, 2016 06:11PM

402 West 38th Street (credit: Google Maps)

(Correction: A previous version of this story incorrectly described the LLC that filed the bankruptcy filing. MADDD West 38 LLC lists Joseph Noormand as a manager.)

UPDATED, 3:30 a.m., Dec. 30: An investor in contract to purchase a Hudson Yards development site filed for “emergency” Chapter 11 bankruptcy protection Thursday in a last-ditch attempt to hold onto the property.

By filing for bankruptcy, MADDD West 38 LLC, which lists landlord Joseph Noormand as an authorized signatory,  hopes to avoid forfeiting the $9.5 million deposit it says it paid to Equity Residential earlier this year.

According to the filing, MADDD West 38 LLC entered contract in March to buy the vacant lot at 402 West 38th Street for $33.4 million.

MADDD West 38 LLC claims in its bankruptcy filing that because of a zoning issue at an adjoining property, it was unable to close by the agreed closing date of Dec. 29. Equity Residential had previously agreed to extend the deadline on multiple occasions, the filing states, but denied the buyer’s request to do so again.

That decision necessitated the “emergency filing to prevent the termination of the contract,” between the buyer and Equity Residential, court documents signed by Noormand state.

Noormand could not immediately be reached for comment. Department of State records indicate show the LLC is listed as c/o MADDD Equities, an active developer in the Hudson Yards area. But when reached by email Thursday, Jorge Madruga, principal at MADDD Equities, said he had sold MADDD West 38 LLC to Noormand. An attorney for Madruga told The Real Deal on Thursday that MADDD West 38 LLC is not owned by or affiliated with his client.

In the filing, the would-be buyer said it owes creditors $27.6 million. That includes $23.95 million, the balance of the purchase price owed to Equity Residential.

The property in question — also known as 505 Ninth Avenue — is part of a “large-scale residential and commercial development” involving multiple adjoining parcels on Ninth Avenue, according to the filing. The total investment in the larger project is $150 million.

The C-shaped lot, which has frontage on West 37th and West 38th streets, wraps around five tenement buildings along Ninth Avenue that were slated for demolition by the city due to disrepair.

Over the past two months, the buyer said, it increased its deposit on the property by $3.5 million, paying Equity Residential a total of $9.5 million in order to gain extensions on the closing.

Most recently, in November, Equity Residential granted another 30-day extension, the filing states. But in the filing, MADDD West 38 LLC insists it wants to close on the property and may be able to do so within 60 days.

“Under the circumstances, [the buyer] is compelled to seek Chapter 11 relief to prevent a forfeiture of $9.5 million deposited and preserve all of its rights under the [sales] Contract,” the filing states.

Equity Residential declined to comment.