Columbia developer Patrick McCuan said he will "play hardball" in his fight to prevent Mercantile Safe Deposit & Trust Co. from putting two Columbia landmark office buildings into receivership to collect onmore than $11 million in unpaid debt.
McCuan's attorneys have staved off Mercantile's attempt to get a hearing tomorrow in county Circuit Court to consider the bank's petition to put the Equitable Bank Center and the Clark Building in Town Center under the control of court-appointed trustees. McCuan is part owner of both buildings.
A county tax sale of the two buildings to collect $265,864.56 in unpaid property taxes on the two buildings also was stopped Wednesday. That happened when Clark/MDG Associates Limited Partnership, owner of the Clark building, and Columbia Bank Tower and EBC/MDG Associateslimited partnerships filed for protection from creditors under Chapter 11 of federal bankruptcy law.
McCuan's financial situation is shaping up to be a test of whether county office building developers suffering in the current market can survive moves by banks to seize their property to make up for the banks' lending losses. The of fice vacancy rate in the county was 23.4 percent in 1990. Building owners have been offering rental discounts and incentives just to fill the space.
"We intend to vigorously defend this matter and we intend to play hardball," McCuan said, insisting he has the resources to hold onto the properties.
Before the recessionary commercial real estatemarket, short-term loans such as the $10.85 million, $9.5 million and $850,000 loans McCuan took in 1989 and 1990 to buy a stake in the two office buildings and another development venture were routinely renewed at maturity, so long as the developer and bank had a good lending relationship.
But many banks have grown more cautious.
"It'sa new market and banks don't do that anymore," said John Bailey, a bank analyst with Ferris, Baker Watts Inc.'s Washington office.
While many banks are losing money because of bad real estate loans, Bailey said, "Mercantile's in great shape. They're just going along relatively business-as-usual in an unusually difficult environment."
The bank obtained a court order last Monday that -- if left unchallenged -- would give the bank the right to take proceeds from McCuan's interest in 14 limited partnerships and other business entities to pay off debt on three Mercantile loans McCuan personally guaranteed.
But McCuan, who has 30 days to challenge the order, said the bank had chosen to "personally attack" him and his lawyers will fight it.
Hesaid his attorneys had advised him not to comment on details of the case, however.
G. Stewart Webb of Baltimore, the attorney who filed motions for Mercantile asking that McCuan's business ventures be tapped to pay $11 million in unpaid principal, plus interest, also saidhe would not discuss the case.
Patrick Tehan, the Mercantile vicepresident whose name appears in affidavits claiming McCuan had failed to make payments on the three loans and failed to pay the balance of the loans after an April 16 court order, did not return a reporter's telephone calls Friday.