A Chelsea condo with swimming pools for everyone files for bankruptcy. Again.
Special administrator says Six Sigma's building will have to be demolished
The Pool House is taking another dive.
The LLC behind Six Sigma’s stalled condominium development at 435 West 19th Street, which includes a personal pool in each unit, filed for bankruptcy a second time last Friday as the project’s restructuring firm gets ready to start from scratch, Commercial Observer reported.
“The scope of the project has changed. It no longer appears that a ‘gut rehabilitation’ of the building can be done efficiently,” William Henrich, the special administrator who took over the project last year, said in the new Chapter 11 filing. “Instead, the existing structure will have to be demolished.”
The entity, Project 19 Highline LLC, has more than $40 million in debt. The filings value the asset at about $55 million.
Jason Lee’s Six Sigma put the project into bankruptcy for the first time last fall in order to avoid a foreclosure auction. The lender on the project, Churchill Real Estate Holdings, accused Lee of pocketing $292,000 in construction financing through a kickback scheme. That lawsuit was settled in January.
Following the first bankruptcy, Churchill managed to remove Six Sigma from the project, replacing it with Henrich and his corporate restructuring firm, Getzler Henrich & Associates. Industry insiders say the process is rarely straightforward.
“It’s certainly a case where the lenders were able to overcome the debtor-friendly protections of bankruptcy and end up gaining control of the asset,” Pioneer Funding Group’s Adam Stein-Sapir told CO. “Normally it can take quite a while.”
Churchill provided a $36 million refinancing package and a $4 million mezzanine loan for the I.M. Pei-designed project last February, and plans to provide additional loans for the completion of the project, which may take over a year. An initial $37 million construction loan was provided by Madison Realty Capital in 2016. [CO] — Kevin Sun