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Related pushing to become One Mad. sponsor.

Byline: David Jones

Top left: Ziel Feldman of HFZ Capital; Bottom left: Steve Ross of the Related Companies; Right: One Madison Park The new holders of the senior debt at One Madison Park issued subpoenas yesterday to force investor Green Bridge Capital to disclose its relationship with Ziel Feldman's HFZ Capital and why they are refusing a June 30 offer to accept a new plan backed by Related Cos.

The new proposal, by an entity called One Madison FM, is designed to bring in new bidders through an open auction and substantially raise the value of the property. Sources say the new entity is backed by Related Cos. Chairman Steve Ross, who is pursuing a plan to become the new sponsor of One Madison Park.

Related, one of the largest and most respected real estate developers in the city, is working with Amalgamated Bank on a financial plan to help pay off creditors of the bankrupt condominium at 23 East 22nd Street, and complete construction.

"He wants to develop it," according to a source familiar with Ross' plans for the property.

One Madison FM, or OMF, issued subpoenas yesterday to force One Madison Park investors Green Bridge Capital and Special Situation S.A., to disclose how the rescue plan by Ziel Feldman's HFZ Capital was developed, their relationship with HFZ and why they are refusing a June 30 proposal by OMF to submit a new plan.

Green Bridge Capital and Special Situation S.A., led by One Madison Park investor Cevdet Caner, are scheduled to provide depositions July 12 in Wilmington, Del., which is where the bankruptcy proceeding is being held.

On Friday, OMF filed papers in U.S. Bankruptcy Court for a plan to launch a new, more open auction on the debt at the property, which will hopefully increase the value beyond the amount in the plan being proposed by rival HFZ.

Amalgamated, which acquired iStar Financial's $162 million senior mortgage loan last month, filed papers in federal bankruptcy court June 23 indicating that it transferred the iStar loan and its own subordinate $90 million loan to OMF.

One Madison FM filed papers blasting the April auction in which HFZ became the sponsor of the bankruptcy plan, saying the process was not open to the public and failed to generate enough value for the property.

"Indeed OMF understands that the debtors did not hire a real estate broker to market the property in a public arena and did not do a public marketing process inviting prospective purchasers to bid on the property," said attorney Zachary Shapiro in the court filing.

According to the filing, OMF is offering the debtors a reorganization plan that would raise the value of the property by $58 million, resulting in a starting bid of $220 million, compared with HFZ's $162 million, thus providing increased revenue to unsecured creditors.

Sources say that a new auction could boost the value of the property and that Ross' true intent is for Related to swoop in and rescue the property, which would mean investing millions of dollars to complete construction and resume sales at the 69-unit building. The luxury tower requires at least $40 million to $50 million in new construction funds to complete the lobby and build out other amenities at the property. Sources say an amended offering plan would have to be approved by Attorney General Eric Schneiderman.

Related earlier this year acquired the debt at Yair Levy's former Rector Square condominium in Battery Park City, a building that Related previously owned and operated as a rental. Related was previously hired by a court-appointed the receiver to manage the property after Anglo Irish Bank filed to foreclose on that property.

Shapiro, calling the HFZ plan "dead on arrival," is asking the debtors to postpone a July 28 court hearing on the matter and a July 21 deadline for objections to the plan, calling the objection deadline a "needless distraction."

Attorney Derek Abbott, who represents, FKF Madison, said that his team is in discussions with the new lenders, but declined to elaborate on the pace of the discussions.

HFZ continues to pursue a lawsuit in New York state Supreme Court against Amalgamated, arguing that it swooped in at the last minute to buy out iStar's debt.

HFZ did not return calls seeking comment. Amalgamated , Related and lawyers for Green Bridge declined to comment. Lawyers for One Madison FM were not immediately available for comment and nor was Ira Shapiro, the original developer of One Madison Park.
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Author:Jones, David
Publication:The Real Deal
Date:Jul 7, 2011
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