45 Park Place mired in involuntary bankruptcy, foreclosure proceedings

Developer-lender feud sidelined as contractors try to force Chapter 7, putting condo tower's value under scrutiny

New York /
Jul.July 21, 2021 07:00 AM
A rendering of 45 Park Place and Sharif El Gamal (SOMA, Getty)

A rendering of 45 Park Place and Sharif El Gamal (SOMA, Getty)

The decade-long saga surrounding 45 Park Place has a new twist.

A feud between the Tribeca project’s developer, Sharif El-Gamal, lender Maybank and various contractors is now being waged in bankruptcy court, where the value of the 50-unit luxury condo building is under scrutiny.

El-Gamal’s appraiser pegs the still-unfinished 43-story tower’s worth at $269 million, while the lender asserts it’s only worth $88 million. Once it is finished, El-Gamal says the tower will be worth over $400 million, compared to Maybank’s more conservative $189 million.

The barbs are part of the latest chapter in the glitzy condo’s lengthy legal troubles, which began in May when six companies joined forces to attempt to force the project’s sponsor, a limited liability company led by El-Gamal, into involuntary Chapter 7 bankruptcy.

The companies behind the proposed liquidation claim they’re owed more than $10 million in unpaid fees for work on the 43-story tower.

The case was filed in a federal court in Delaware, where the LLC is incorporated, and was first reported by PincusCo. Petitioning creditors include Ismael Leyva Architects and curtain wall contractor Permasteelisa North America.

Allegations of unpaid construction fees at the project are not new. General contractor Gilbane Residential Construction had a public showdown with El-Gamal over a delayed $10 million payment in 2019 and is now trying to recover more than $15 million in its own action.

Of the six companies who orchestrated the bankruptcy petition, most had filed mechanic’s liens against the property and, in one case, Domani Inspection Services sued the sponsor back in spring 2019. What’s novel about this proceeding is its venue — and its potential fallout.

A bankruptcy filing halts all other pending litigation, including a foreclosure action that El-Gamal’s lender, Malaysian bank Maybank, initiated in March of last year.

If the petition moves forward, El-Gamal’s company that manages 45 Park Place would have to liquidate all assets and the six creditors who initiated the case could cut in front of the bank in the line to get repaid. That’s a stark difference from the lender’s foreclosure proceeding, in which most contractors would likely see their claims wiped out.

With those stakes, the bankruptcy filing has created a case of strange bedfellows, with El-Gamal and Maybank aligned in advocating for the petition to be thrown out, though they are pursuing that goal in very different ways.

Maybank, who called the bankruptcy filing “a scorched earth litigation strategy to frustrate and delay the lenders’ efforts to foreclose,” is arguing that El-Gamal has no cash to pay a Chapter 7 trustee, let alone finish the condo tower.

The bank attached a CBRE appraisal as an exhibit that pegs the project’s market value today at $87.9 million, compared to $189.2 million once construction is done. The appraiser estimated it would cost nearly $84 million over a year and half to complete the tower.

In a motion filed last week, Maybank asked the court to dismiss the petition, or at least grant it permission to continue its foreclosure case.

El-Gamal’s camp is also asking the judge to dismiss the petition, claiming that the creditors are acting in bad faith and to use the court as a “collection device.” But the developer’s legal team argues that the project is in the black and that a liquidation proceeding could jeopardize that.

“A bankruptcy will not be economical or efficient, but will only result in a further delay of certain issues and add substantial costs,” wrote the developers’ lawyers in its motion. They also asked the court to award them punitive damages and legal fees.

Citing a separate appraisal by JLL, El-Gamal said in an affidavit that the project’s market value today — with about 65 percent of construction completed — is $269 million. Once completed, according to the appraisal, its value will rise to more than $400 million, compared to the nearly $140 million in outstanding secured and unsecured liabilities owed to an estimated 85 potential creditors.

The tower’s offering plan projects its sellout as $447.6 million. The asking price for the 50 units ranges between $2,102 and $7,535 per square foot, with 11 residences in contract, according to a July analysis by new development data firm Marketproof.

The parties are scheduled to meet in court on Aug. 18. El-Gamal declined to comment. The attorney representing the creditors in the Chapter 7 action did not respond to requests for comment, nor did Maybank.





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