Columbia Developer Patrick McCuan is seeking approval in U.S. Bankruptcy Court to sell two landmark Columbia buildings to partnerships controlled by the Baltimore bank that financed them.
The Equitable Bank Center and the Clark Building in Town Center would be transferredto two partnerships controlled by Mercantile Safe Deposit & Trust Co. if McCuan's reorganization plans are approved.
McCuan filed the plans two weeks ago.
In April, McCuan said hewas going to play "hardball" to keep the bank from putting the buildings into receivership.
He began the fight by filing for protection from creditors for the two buildings' partnerships under Chapter 11of the U.S. Bankruptcy Code, and by taking other legal steps to prevent Mercantile from putting the buildings under control of court-appointed trustees.
The new reorganization plans would transfer the Equitable and Clark buildings to the 10320 Little Patuxent Parkway Limited Partnership and the 5565 Sterrett Place Limited Partnership, respectively. Both list John A. O'Connor Jr., senior vice president and secretary of Mercantile, as their resident-agent.
O'Connor confirmed that the bank controls the two partnerships, but declined to comment on the sale.
McCuan also declined comment on the sale.
Under the plan, McCuan's Development Equities Group Ltd. would no longer have an interest in either building, and the partnerships that now own the buildings would be dissolved.
The plan would likely mean payment in full for the buildings' creditors, according to a document filed with the plan.
Those claims involve more than $11 million owed to Mercantile, and nearly $2,000 to several other creditors.
The buildings' partnerships also owed the county about $266,000 in unpaid property taxes.
Both buildings were scheduled for tax sale April 24, but the sale was canceled because of the bankruptcy filings the daybefore.
If the sale goes through under McCuan's latest proposal, "That will be good for the county in the sense that the taxes will have to be paid off," before any other debts are paid, said Mark McCurdy of the county Office of Law.
Under the reorganization plans, thetwo properties would be transferred to the bank-controlled partnerships 15 days after U.S. Bankruptcy Judge James F. Schneider approves the plans.
Creditors have until today to file objections to disclosure statements to be filed with the Clark Building's reorganization plan and until tomorrow to file objections to the Equitable Building plan's statements.
Once they are approved by the judge, the plans and statements will be mailed to creditors, who will vote on the plan before the final hearing is held.
In an affidavit filed in April, McCuan protested Mercantile's foreclosure action as harmful to himself, the bank and his other creditors because most of his assets were tied up in his properties.
"Under the present market circumstances,these interests are not liquid. Only if these interests continue as going concerns will they produce cash," he stated.
The bank's efforts, he continued, "will likely wreak financial havoc upon a number of the real estate entities which are not debtors in these cases and which make up virtually all of my wealth."
Mercantile had sought put into receivership 14 limited general or limited partnerships to collect income to pay off part of the two office buildings' debt, which McCuan had personally guaranteed.
A symptom of the commercial realestate slump, at least five commercial properties owned by others did go to tax auction in April, but no bids were made for the more expensive properties, with tax debts ranging from $35,000 to $172,500.
Commercial real estate brokers have estimated that lenders foreclosed on or repossessed nearly a quarter of Columbia's office buildings.