|
Source
August 4, 2008 - 5:50PM Tall troubles for Tempe's Centerpoint Ed Taylor, Tribune The future of the Centerpoint high-rise condominium project rests on a knife’s edge and could fall in either direction within days. Mortgages Ltd., the Phoenix-based lender that is in Chapter 11 reorganization following the suicide of its owner and president, Scott Coles, is in final negotiations to line up a $4.5 million financing package for the downtown Tempe towers. If the deal comes through, it would trigger another $70 million loan from another unnamed lender to complete the almost-finished twin towers, according to officials of Avenue Communities, the project’s developer. But if the deal isn’t finalized soon, Centerpoint Managing Partner Ken Losch has said the company will file a lawsuit against Mortgages Ltd., an expensive and time-consuming process. “If it (the financing package) does happen, it would be a good thing for everyone,” said Jason Rose, a spokesman for Avenue, adding that the company is upbeat about the prospects for completing the project. “Very positive discussions are going on and a settlement certainly appears possible, which is very good for the project in Tempe,” he said. But the Chapter 11 case and the possible financing plan for Centerpoint were thrown in question Monday as another Mortgages Ltd. borrower, Rightpath Limited Development Group LLC, filed a request to convert the case to a Chapter 7 liquidation. Under a Chapter 7 scenario, the assets of Mortgages Ltd. would be sold to pay creditors, and the company would be disbanded. A hearing is scheduled on Wednesday before Judge Randolph J. Haines in U.S. Bankruptcy Court in Phoenix to consider proposed debtor-in-possession financing for Mortgages Ltd. that would keep the firm operating while it goes through reorganization. Also the judge said he is prepared to set a schedule to hear evidence on Rightpath’s request. Rightpath, which received promises of a Mortgages Ltd. loan for a commercial and entertainment development around a new spring training baseball complex in Glendale, said Mortgages Ltd. was operating a Ponzi scheme and engaged in racketeering and has no hope of again becoming a functioning entity. “The current management of (Mortgages Ltd.) is comprised of self-interested insiders that have proven themselves to be completely incapable of managing the bankrupt estate,” the company said in its petition. Bradley Stevens, an attorney for Mortgages Ltd., called the charges “a lot of wild allegations. . . . This is a very extreme position to be taking early in the case. The case is not 45 days old, and already they’re trying to pull the plug.” On Friday, Mortgages Ltd. filed a notice that it had reached an agreement to receive a $5 million loan from Phoenix-based Stratera Portfolio Advisors to provide working capital for the bankrupt company. But Stratera principal Doug Smith said that money is not intended to fund a loan for Centerpoint or any other project Mortgages Ltd. is financing. “This would be for the company to use for general and administrative needs while preparing a reorganization plan,” he said. “Mortgages has been a long-time company in the community that has filled a gap that banks weren’t willing to fill, until it ran onto the current shoals. . . I would like to see it have a chance to right itself and be what it once was.” In any event, Smith said it was unclear if Mortgages Ltd. officials would even accept Stratera’s offer. “They are meeting with another firm today (Monday),” Smith said. “That is not finalized.” Mortgages Ltd. committed to lending $195 million to Tempe-based Avenue Communities for Centerpoint but only provided $120 million. Losch said the project needs $75 million to complete the two towers. Under the pending plan, Mortgages Ltd. would provide $4.5 million to weatherproof the structures to keep them from being damaged by rain and other elements. Once that loan is approved by the bankruptcy court, another lender would provide the rest of the money to complete the towers, Losch said. Tower One, which has 22 stories, is nearly finished, and residents will be able to move in within 60 to 90 days from the close of the new loan agreement, Losch said. The second 30-story tower would open about six months later, he said. About $24 million worth of units have been sold, he said. Rose said construction continued on the buildings even after Mortgage’s bankruptcy filing because subcontractors were willing to work on the promise they would be paid in the future. However, some subcontractors have filed liens on the buildings totaling $24 million to ensure future compensation. Rose was not unduly concerned, saying Avenue Communities has a good relationship with its subcontractors. He said they would be paid when new financing is completed. |