A US Bankruptcy Court judge ruled on the matter on Tuesday
Just when it seemed like everything was down in the dumps for the planned Sutton Place tower, it seems like the project may just get a new lease on life. A US Bankruptcy Court Judge approved a plan Tuesday to hire brokers and sell the site, the New York Post reports. The sale of the 262,000-square-foot project would be accompanied by the plans drawn up for the site by British architect Norman Foster’s firm, Foster + Partners.
The site has been mired in legal controversy right from the start of this year. News first emerged in February that the site was at risk of foreclosure, after the developer on the project, Joseph Beninati’s Bauhouse Group defaulted on a loan lent to it by Gamma Real Estate.
Bauhouse had to pay off $147 million in loans, and a judge later ruled that the foreclosure proceedings could take place at the end of February. Things got a lot murkier after that. Bauhouse put the project into Chapter 11 bankruptcy subsequently, which was seen a move to avoid the foreclosure proceedings. In July, Joseph Beninati sued Gamma Real Estate. Beninati’s lawyer was the cousin of Gamma’s head N. Richard Kalikow. Beninati’s lawsuit alleged that both had conspired to ensure that Bauhouse would default on its loan, so Gamma could take over the property.
Last week, Gamma Real Estate filed its own lawsuit. This time against a trio of real estate investors, who Gamma allege helped fund Beninati’s bankruptcy proceedings and in turn prompt Beninati’s firm to "intentionally breach" its contract.
The bankruptcy court judge finally seems to have cleared the air somewhat this week. Those who’ve lent money to this project will have a chance to bid on the property, and the loan amount will be included in part of the bid. When Bauhouse filed for bankruptcy the site was valued at about $270 million, but with the slowdown in the luxury market the site might sell for much lower.