Strapped with $1.3 million in debt, a company controlled by Bel Air Developer Steven R. Hankins filed for federal bankruptcy protection the day before the company's commercial building was set for sale at a foreclosure auction.
Howard Heneson, a lawyer representing Van Bibber Square Inc., said the move Thursday was designed to avoid the auction, scheduled for Friday by Jonathan Melnick Auctioneers of Baltimore.
When a corporation files for federal bankruptcy protection, all action against it is put on hold, pending rulings by a bankruptcy judge.
Also, the Chapter 11 filing allows a business to restructure its debt.
The procedure requires a company to file a reorganization plan and have creditors and the court approve it.
"Chapter 11 means they're going to reorganize the business and hopefully come out of it paying everybody that is obligated and working something out in terms of payment," Heneson said. "There will be no effect on the businesses located in the building. The only difference is that Van Bibber Square Inc. will have to report cash flow to the court."
Papers filed in U.S. Bankruptcy Court in Baltimore say Van Bibber Square Inc. has $1.4 million in assets, namely Van Bibber Square, a 9,400-square-foot office and retail complex at 303-309 S. Main St., Bel Air. Court papers say the four tenants of the building will remain tenants under current lease conditions.
Court papers also list $1,348,001 in debt, including a $1.1 million loan from Key Federal Savings Bank in Owings Mills, in Baltimore County. A $75,000 loan from Hankins Development Corp., which is controlled by Hankins, is listed in court papers as another liability.
Other liabilities include $19,000 owed to B. Lipman Associates and $4,000 owed to J.B. Drywall Co. of Street for judgments awarded in Harford Circuit Court.
"I have no comment on anything," Hankins said Friday afternoon.
Friday marked the the second time Van Bibber Square was scheduled for foreclosure auction. An auction was scheduled in May, but was canceled after Hankins settled a mechanic's lien on the complex.
The Van Bibber project has been surrounded by controversy since Hankins proposed to bulldoze the historic Van Bibber House, located at Business U.S. 1 and Main Street, and replace it with an office building. Hankins and Bel Air officials feuded over the project in what town planner Carol Deibel called "an up-and-down ordeal," in a November interview with The Harford County Sun. Eventually, the two sides settled their dispute when Hankins agreed to restore the late 18th-century building.
Besides the Van Bibber Square Inc. bankruptcy, Hankins has faced other business troubles in the past year.
In late August, creditors auctioned two more real estate holdings that formerly belonged to Hankins. A Baltimore auctioneer sold two parcels of land that had been owned by Emmorton Industrial Park Limited Partnership for a total of $800,000. Hankins is the partnership's general partner.
Hankins transferred the deed for both parcels to Old Court Asset Holding Inc. in April. The transfer was part of a private financial settlement with that company, set up to manage the assets of Old Court Savings & Loan Inc., which went into default.
On Aug. 5, an auctioneer sold the Courtland Square Building in downtown Bel Air for $1.4 million. Courtland Square Inc., a company controlled by Hankins, transferred the deed for the three-story office building to an Adelphi, Prince George's County, creditor to avoid foreclosure. However, the foreclosure went through because of a $2.09 million loan default.
In February, a partnership controlled by Hankins avoided a foreclosure auction of a 162-room Ocean City hotel by filing for Chapter 11 bankruptcy protection. That partnership faced about $9 million in debt.
Hankins had planned to expand the Tollgate Mall in Bel Air and build an office/research park with a hotel near the mall. Those plans were dropped because of a water and sewer moratorium on the west side of Bel Air.