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Reichmans hang on in Big Apple.

The reorganization plan filed by Olympia & York Development Inc. in a Canadian bankruptcy court would allow Paul, Ralph and Albert Reichman to stay in control of their holdings in the Big Apple.

The yet-to-be approved plan will put the parent company in the hands. of unsecured creditors but leave the majority of American portfolio, comprised mostly of New York City real estate, in the hands of the Reichman brothers.

Under the plan, as reported in The Wall Street Journal, the Reichmans would give 90 percent of the parent company to unsecured creditors if they could not repay their debt in full in five years. The U.S. properties, located mostly in New York City, and other assets would be placed in a separate company and unsecured creditors would receive warrants to obtain a 49 percent interest.

The Reichmans have been working to come up With a plan suitable to creditors since they filed for bankruptcy protection in Toronto in May. They have not sought such protection in New York.

The plan filed in Canada, is another "prudent" move on behalf of the Reichmans to shield their portfolio in New York, where they are the largest commercial owner, said Professor Lyn Sagalin of Columbia Business School.

"The strategy of something like that is to protect the portion of the portfolio that is not in trouble," said Sagalin, professor and coordinator of the Real Estate Program at Columbia.

American creditors are stilling coming to grips with the complex plan and there are questions as too how much it protects their interests. "It's two inches thick," said an attorney who represents some of the bond holders.

The New York properties, however, have debt problems of their own. 55 Water Street was recently given over to bond holders and Mutual of America contracted to purchase 320 Park Avenue.

The different classes of creditors, which include some of the world's largest lenders, are due to vote at the end of this month.
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Title Annotation:Paul, Ralph and Albert Reichman to retain control of holdings in New York, New York under Olympia and York Developments Ltd.'s bankruptcy reorganization plan
Author:Fitzgerald, Therese
Publication:Real Estate Weekly
Date:Nov 4, 1992
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