A foreclosure auction set for 29 loft-style condominiums in Worcester’s Main South neighborhood was cancelled at the 11th hour when the developer filed for bankruptcy.
Hours before the auctioneer’s gavel was about to fall on dozens of loft-style condominiums in Worcester, the developer declared bankruptcy.
Faced with the prospect of a foreclosure auction that was scheduled for last Wednesday, Brett Levy and Kathleen Buckley, principals of University Park Lofts at 21 Illinois St., filed for Chapter 11 reorganization.
Among the debtors are Strata Bank, which is owed $3.87 million for a first mortgage, and Hannen Holdings, which is due $336,000 on the second mortgage, according to court documents. The developer, Hopkinton-based HE&PG, lists assets of $5.3 million and liabilities that total $4.8 million, the 32-page filing said.
“We are now in reorganization and hopefully this will lead to a positive solution for everyone,” said Levy. “I see a future that includes additional sales, renters, people who want to rent-to-own, [and] investors. I see the beautiful building filling up.”
But Rosalind Levine, a longtime Worcester broker, said bankruptcy won’t save the project. “I wish them well, but filing is just a stay of execution,” she said. “He’s hoping to buy time, but eventually I think it will go to foreclosure.”
Neil Foisy and Crystal Anson, who paid $174,900 for their unit last summer, insist Levy and Buckley, the developers and condo trustees, cannot be trusted. The couple said the principals have failed to return the owner’s telephone calls or respond to certified letters with questions about the financial status of the condo association.
“Brett and Kathleen have been so unresponsive that we have no idea where the condo association stands at this point, as far as the financial books are concerned,” he said. “They just ignore our requests. They throw up nothing but smoke.”
In an e-mail, Crystal Anson said she would do everything in her power to make sure that the court does not grant the bankruptcy. “We need the building to be taken over by the bank,” she wrote. “We need the price of the units to reflect the current market and not what dreams they have for it.”
Levine, the Worcester agent, said University Park Lofts may have failed because they were priced too high at $160,000 to $250,000. She said condos that she listed last year listed in the low-$100,000 range took six months to sell. In addition, she said, the Maine South area of Worcester where the loft project is located is not the safest section of the city.
“I love Worcester but the Clark University section of the city is not the best area; the park across the street from the lofts has had issues,” she said. “But if the lofts were priced at $99,900, we wouldn’t be talking about bankruptcy or foreclosure.”
Chapter 11 is an option available to anyone who has assets or income for use in restructuring and repaying their debts. Creditors vote on whether to accept or reject a plan of reorganization, which must be approved by the U.S. Bankruptcy Court. Filing a bankruptcy petition stops most collection actions against the debtor or the debtor’s property.
Mark Shear, president of Berman Auctioneers & Appraisers, was scheduled to hold the foreclosure auction of 29 unsold units last Wednesday at the property. The one- and two-room units, range in size from 680 square feet to 1,143 square feet. Through last summer, eight of the units had sold for $136,750 to $240,800.
