Lenders forgive $20 million debt


sale anticipated

March 15, 1995|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

The owner of the NationsBank Center II has agreed to relinquish control of the eight-story building downtown in

exchange for lenders forgiving more than $20 million in debt, according to court documents.

As a result of the agreement, the federal Resolution Trust Corp. is expected to take control of the property, at 100 S. Charles St., from a partnership controlled by Ackerman & Co. Inc., the building's Atlanta-based developer, as early as May 1.

Ackerman "believes this settlement is in the best interest of both the estate and its creditors," federal court documents filed this month said.

An Ackerman partnership called Tower II Associates Ltd. Partnership filed for Chapter 11 bankruptcy court protection for the 160,000-square-foot building in January. The bankruptcy filing was made after Provident Bank of Maryland, which is also a lender to the project, filed a lawsuit seeking more than $1 million from a delinquent loan and attempting to seize the property through foreclosure.

Since the bankruptcy filing, which held off the auction, the RTC -- the federal agency charged with selling assets of failed thrifts -- First Union Corp. and Provident have been working to collect outstanding debts from the Ackerman partnership, which completed the building in 1988. The RTC became involved in April 1990 when it took control of the defunct Baltimore Federal Financial, the building's original lender.

The ownership shift is contingent on final approval from the U.S. Bankruptcy Court, which has scheduled a hearing on the matter for later this month.

"The debtor has consented, and I would anticipate the lender would proceed with foreclosure," said Richard M. Kremen, a Piper & Marbury partner representing First Union, a participant in the RTC's mortgage.

"There will be a foreclosure sale by either them or by us," said Paul M. Nussbaum, a Whiteford, Taylor & Preston attorney representing Provident.

Meanwhile, the RTC has entered negotiations with a number of prospective bidders to purchase either the building outright or its outstanding debt.

The bidders include a joint venture between Phoenix-based Biltmore Holdings Corp. and a fund controlled by CS First Boston Inc., a $110 billion New York investment house, people familiar with the negotiations said. These sources said the duo has offered the RTC roughly $9 million for the property, a fraction of the $20.3 million owed. The RTC is expected to forgo attempts to collect the remainder. Ackerman recently valued NationsBank Center II at roughly $7 million, court documents said.

NationsBank Center II is about 90 percent occupied by federal government agencies, Mead Data Central and the CFS Health Group Inc., and produces rental income of more than $145,000 a month.

Neither Biltmore, CS First Boston nor Ackerman officials responded to calls for comment.

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