Developer Sonny Astani has put his Concerto condo project in downtown L.A. into Chapter 11 bankruptcy in an unusual effort to hasten the completion of the $300 million development.
The project’s construction lender, Corus Bank of Chicago, was shut down Sept. 11 by the Federal Deposit Insurance Corp., putting the 348-unit complex in limbo. The key ssue: liens the bank has on each unit are now frozen in place.
GTS 900 F LLC, which controls the development at Figueroa and Ninth streets, filed for Chapter 11 protection on Sept. 17, according to a U.S. Bankruptcy Court filing. The project includes a 271-unit tower scheduled to be completed by the end of the year and a finished 77-unit mid-rise loft building, which was sold out in a one-day event last month.
Astani said he cannot wait until October, when the FDIC is supposed to announce Corus’ buyer, to have the liens released so buyers can complete their sales. It is typical for construction lenders owed money to place liens on individual units of a residential project.
Astani instead wants a bankruptcy judge to push the sales through despite the liens. Astani said proceeds from the sales would be used to pay off the construction loan and contractors.
“I decided to not wait any longer and risk losing my buyers,” said Astani, who heads Astani Enterprises Inc. in Beverly Hills. “I’ve taken my destiny in my own hands and will go to a local judge and explain what’s happened.”
Corus has yet to fund $33 million of the $190 million loan. Astani said he decided to hold the one-day sale event, which resulted in $31 million in sales, because of the funding shortfall.
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