Sale Of Bankrupt Co-op Looms; Shareholders Weigh Options

Anita Terrace co-op in Rego Park, which has lingered in bankruptcy court for more than three years, recently settled on a payment plan with its creditor, RB Assets, that would place the residential facility, which houses more than 300 families, up for sale. However, shareholders of the beleaguered co-op say, unless a latecomers proposal is accepted, they stand to lose most of the market value of their equity.
Under the stewardship of the cases bankruptcy trustee, Zachary Kass, a deal was negotiated on April 27 in which RB Assets would be paid $35 million in mortgage debt from money raised through the sale or refinancing of Anita Terrace. Bids for the sale were being accepted until Tuesday with offers requiring a $5 million down payment. An auction would then take place, and according to guidelines set by the bankruptcy courts judge, Carla Craig, a deal would be finalized by June 30.
Currently, the front-running proposal, offered by Larry Gluck, the principal of Stellar Management, would purchase the co-op for approximately $52 million and deconvert it into rental property. The deal would offer shareholders three options. They could accept a payout for their shareswith the average being $30,000and then leave. They could accept the payout and continue to rent in the apartments at market value. Or they could decline the payout, lose their shares and stay on as rent-stabilized tenants.
"Its the liquidation of a community," said shareholder Ted Mandell, criticizing the offers on the table. He noted that many people who lived in the co-opwhich, for more than 10 years, battled with its former management company, ViSutton Associates over the mortgage and buildings disrepairwere immigrants who had put their life savings into their apartments. He predicted that, after getting the small payout, most would not be able to purchase another home, let alone cover rent with the sum.
"They lose everything, and then they will be forced to just move in with a relative."
Mandellwho has complained that while the bank had attorneys representing them during the bankruptcy case, the shareholders were barred from legal counsel on the grounds that their costs were already too muchbelieves the co-op had more assets than liabilities and should be getting better offers.
As a result, he and other shareholders who attended an information meeting on Thursday think they might have found the best deal.
ROA Hutton, a company that specializes in co-op to condominium conversions, held the meeting to educate shareholders on another alternative that would pay off the underlying mortgage owed to RB Assests and allow them to keep ownership of their homes and raise their equity levels.
"I think Gluck is going to wind up taking a building worth $100 million for $50 million," said Jack Boyajian, president of ROA Hutton, explaining the conversion process. "You have more than you think."
Boyajian, a latecomer to the co-op bidding process, told shareholders at the information session that, by converting to condos, the equity of their homes would jump from Glucks $52 million price to more than $100 million, based on similarly appraised condominiums and co-ops in the neighborhood. He noted that the reason for the jump in equity was that condos have become very attractive to purchasers, due to lower common cost fees and no co-op board approvals for renting or selling apartments.
Boyajian guaranteed all shareholdes mortgages would be refinanced or carried in his plan. He acknowledged, though, that since his company was a latecomer to the bidding processonly finding out about Anita Terrace through a shareholder two months agotime was the biggest hurdle. According to Boyajian, Kass has expressed interest in the plan, but in order to make it feasible, ROA Hutton would need an additional 30 days. He intended to make an appeal for additional time, but was unsure if Judge Craig would accept. He also said that their bid might meet opposition because conversion to condo is still relatively new and untested in New York.
Rafik Kushmakov, a shareholder who attended the ROA Hutton meeting, said that many shareholders have grown cynical over the years from continuous talks with little change or disappointing outcomes, but added that a condo conversion might work.
At the height of the bullying, the couple says Rashawn came home with bruises and a torn shirt. However, she said they were not bad enough to require a medical treatment or a hospital visit.