Tax credits for Railway Exchange Building in jeopardy if bankruptcy petition moves forward, owner says
Date Posted: December 3, 2019
Posted In: Projects,
From St. Louis Business Journal: The owner of the Railway Exchange Building said the involuntary bankruptcy petition filed against it threatens the $300 million redevelopment by jeopardizing more than $100 million in tax credits.
HH St. Louis Railway LP, a subsidiary of building owner Florida-based Hudson Holdings, said the Chapter 7 petition filed last month by several contractors would complicate the company’s ability to not only redevelop the vacant property but also to address claims by other creditors, according to HH St. Louis Railway’s motion to dismiss the suit that it filed Monday. Those creditors include Gamma Real Estate Capital LLC, which provided the company with $18.6 million in financing to buy the Railway Exchange Building and adjacent garage, the filing said.
A hearing date on the matter has not yet been set.
Lafser & Associates, Western States Fire Protection Co. and Development Strategies Inc. filed the involuntary Chapter 7 bankruptcy petition Nov. 8 in federal bankruptcy court for the Eastern District of Missouri, alleging Hudson Holdings still owes them nearly $95,000 for unpaid work on the building, at 605 Olive St. HBS Co. joined the claim after the initial filing. The total creditors say they’re owed is now $115,547.99, court filings show.
“The petitioning creditors’ hope is that a bankruptcy filing would spur efforts to develop the building as there had been no signs of a solution for months,” their attorney, Tal Sant of Affinity Law Group LLC, told the Business Journal.
HH St. Louis Railway LP acquired the vacant, 1.2 million-square-foot building in downtown St. Louis’ central business district in January 2017 for $19.9 million. But two water main breaks and other financing issues have stalled the $300 million redevelopment. Architecture firm CannonDesign and five other contractors filed mechanics’ liens totaling $2.9 million earlier this year against Hudson Holdings for unpaid work.
“These creditors, which have the overwhelming amount of debt, have substantially more skin in the game than the petitioning creditors…” HH St. Louis Railway’s attorney, David Sosne of Summer Compton Wells, wrote in the company’s response. Sosne declined to comment for this story.