The Federal Deposit Insurance Corp. has filed a motion in U.S. Bankruptcy Court seeking to prevent developer Sonny Astani from closing sales on 77 loft units at his Concerto condo project, the developer said.
Astani placed his project at Figueroa and Ninth streets into Chapter 11 bankruptcy in an unusual move Sept. 17 after his construction lender, Corus Bank, was seized by regulators earlier in the month.
Astani said the FDIC was unresponsive to requests to approve the condo sales, and he has intended to ask a bankruptcy court judge to approve them. The sales have been held up by liens the Chicago bank has on the units.
But in its motion filed Tuesday in Los Angeles, the FDIC asked that the liens not be lifted because the condos sold for far less than anticipated. The prices break down to an average of $368 per square foot, nearly 40 percent less than the $600 per square foot figure outlined in a Astani's July 2007 construction loan agreement, according to the FDIC motion.
Astani acknowledged the prices are below those agreed upon in the loan document but said the sales reflect the state of the market.
"It's a legal argument, it doesn't take into account what is on the ground," said Astani, who plans to file a response to the FDIC's objection by Oct. 20.
Astani held a one-day sales event Aug. 29 and sold all 77 of the project's loft units, which are in a mid-rise building. Astani planned to use the $31 million proceeds to pay off contractors and the construction loan. Work is on hold at the project's 271-unit tower, which had been scheduled to be completed by the end of the year.
There is still a chance the issue could be resolved if the bank's assets are sold to Starwood Capital Group LLC and TPG, as has been expected. Astani said he's been told that the deal, in which the FDIC would retain a 60 percent stake in the assets, could close as soon as today.
Attorneys representing the FDIC were not immediately available for comment.
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