Shapiro loses control of One Madison

<i>Eichner's rescue plan has been dropped </i>

From left: One Madison Park condominium developer Ira Shapiro, billionaire investment partner Cevdet
Caner, investor Ian Bruce Eichner of Continuum and One Madison Park

Embattled One Madison Park condominium developer Ira Shapiro has agreed to give up much of his authority at the project under a settlement with billionaire investment partner Cevdet Caner, effectively ending his $40 million rescue deal with investor Ian Bruce Eichner, The Real Deal has learned.

Shapiro reached a settlement last Tuesday with Caner’s Green Bridge Partners, which helped finance One Madison Park in 2007 and filed suit in December to block the Eichner agreement, which would have financed the completion of the 23 East 22nd Street condo and leave Shapiro in charge of the property.

Caner alleged that Shapiro was making unilateral decisions on the troubled property without the permission of his investment partners, and filed the December suit in New York State Supreme Court to block the Eichner plan from going through.
Specific terms of the settlement were not released, but sources familiar with the agreement said the various parties are now fighting over how the new plan will be implemented, including payment of outstanding debts, the right to individual apartments and the role of various investors in the project.

“There’s a lot of internal shoving and kicking,” said one legal source who asked not to be identified.

Late last month U.S. Bankruptcy Court Judge Kevin Gross in Delaware slapped an injunction on Shapiro, barring him from making any decisions regarding One Madison’s development firm, Slazer Enterprises, without the written consent of Green Bridge.

Green Bridge in 2007 loaned Shapiro $18 million to fund development of the condo and by 2009, entered a deal with Shapiro’s partner Marc Jacobs, to acquire his proxy rights in the development company.

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After Shapiro and Jacobs defaulted on their mortgage loans and The Real Deal uncovered a series of questionable loan transactions and flips at the condo, iStar Financial filed to foreclose on Shapiro in early 2010.

The foreclosure left the 67-story tower unfinished, without a planned lobby, no second residential tower and in the hands of a court-appointed receiver.

By the summer of 2010, a group of creditors represented by famed attorney Barry Slotnick, threw the condo project into involuntary bankruptcy, in the hopes that they would gain priority when the project’s debts were repaid. That group of creditors was owed about $12 million.

This past November, Shapiro reached a deal with Eichner to finance the completion of the condo and put Eichner and Shapiro in charge of the project.

Caner is now working with Jacobs, various creditors and lenders to work out a plan to complete his own rescue plan for the project.

Shapiro declined to comment as did Slotnick and attorneys for Green Bridge. Eichner did not return calls seeking comment.