Bankruptcy plan ok'd for 850 East Third Avenue.

The bankruptcy court accepted a plan last week whereby the partnership owning 850 Third Avenue would merely turn it over to the lender, Prudential Insurance Company.

The scheduled auction of the building waas canceled last week.

According to lender Prudential Insurance Company's counsel on 850 Third Avenue, W. Christopher White, a partner with Cadwalader, Wickersham & Taft, they were operating on a duel tract, one the prepackaged plan and the other the foreclosure and sale option. The bankruptcy plan was approved last Wednesday by Justice Cornelius Blackshear and they anticipate taking title the week of March 8, a Prudential spokesperson said.

Another building located at 55 Broadway, a 295,000-square-foot property that is 74 percent occupied with retail and a 5,000-square foot restaurant known as Morgan William, was repurchased from Aetna Pension Fund through a foreclosure by advertisement sale by Prudential last Monday. It was apparently the first such sale by advertisement in 60 years.

White said it would be beneficial too the real estate community if this was used more often as it streamlines the foreclosure process. "It is significantly less expensive and less time-consuming than a judicial foreclosure, he said. The amount of indebtedness was $61 million and the lender could have decided to accept less than that. Both buildings will be operated by Prudential's Premisys management company.

The partnership that held title to 850 Third Avenue -- 850 Third Avenue Limited Partnership and VMS Realty Partners had filed for bankruptcy after foreclosure proceedings began.

White said the borrower asked for time to sell or refinance and Prudential allowed them about 10 months.

"If they were unable to find a buyer, then they would consent to a judgement and foreclosure," he said.

Meanwhile, with the permission of the bankruptcy court, the auction was advertised.

One attorney familiar with the case explained that while there were offers and expressions of interest coming from all over the country on 850 Third Avenue, none of them came near the $100 million owed the lender. Other experts had predicted in REW previously that the auction would not elicit offers over the minimum and the lender would merely take over the property at that time.

By going through with the bankruptcy proceeding rather than the auction another bankruptcy attorney explained, other creditors are satisfied at the same time. White said the borrower was able to come to terms with creditors.