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Wednesday, May 18, 2022

Apartment Buyer Suing Casden Over Refusal to Pay Judgment

Apartment Buyer Suing Casden Over Refusal to Pay Judgment

Real estate mogul Alan Casden, known for hardball legal tangles with competitors and partners alike, faces another challenge, this time from the real estate investment trust that bought out his apartment empire.

Denver-based real estate investment trust Apartment Investment & Management Co. (Aimco) filed suit May 13 demanding that Casden pay his agreed-upon share of a $120 million judgment arising from a 1998 real estate consolidation.

Aimco wants Casden to “comply” with an agreement to indemnify its real estate syndication division, National Partnership Investments Corp. (Napico) from liabilities arising from the suit, which was already raging when Aimco purchased Napico from Casden last year.

In the four-year-long lawsuit, plaintiffs claimed 18,000 limited partners in eight Napico-run tax shelters lost more than 80 percent of their investments when Casden merged 98 properties into a real estate investment trust he controlled. Last November, the plaintiffs won a judgment against Casden, Napico and three other defendants, including Napico founder Charles Boxenbaum and Casden’s older brother Henry, who is separately suing Casden over a severance disagreement. In April, a judge reduced it from $184 million to $120 million.

Aimco filed its lawsuit after former investors in Real Estate Associates LP said on May 12 that they would seek to place Napico under receivership after it allegedly failed to post a $90 million appeal bond. That suit was filed on May 15.

In its complaint, Aimco alleges that Casden agreed to indemnify Napico from liabilities in the investors’ case as part of the 2002 sale. But when the company asked Casden to reassure that he would hold it “harmless” from the verdict, Casden “did not provide the requested assurances.”

Meanwhile Napico has to fight off the plaintiffs, who are seeking the receivership in order to force Casden to make good on his promise. According to Nicholas Chimicles, an attorney for the plaintiffs, the defendants announced they would post a $30.7 million bond on one of the counts, but failed, “without explanation,” to post bond on Napico’s behalf as required by the agreement.

A spokesman for Casden did not return calls.

Casden is still tied up in a lawsuit with his older brother Henry, the former president of Casden’s real estate company, who is suing to recover part of his severance and at least $225,000 in unpaid dividends. Meanwhile, Casden is also being sued by rival real estate investor Ira Smedra over a still-moribund Westwood apartment project.

RiShawn Biddle

Fire Sale

It may be a slow M & A; market, but not for those who know where to look.

USBX Advisory Services, the Los Angeles-based investment banking firm founded three years ago, closed four deals alone in April.

USBX advised D & M; Holdings Inc. of Japan on the purchase of ReplayTV, a video recording service, and Rio, an MP3 music business, from bankrupt SonicBlue Inc. for a combined $36.2 million. The deal was unusual because SonicBlue’s assets were auctioned off by the U.S. Bankruptcy court in San Jose.

D & M; Holdings, backed by New York-based private equity firm Ripplewood Holdings, also purchased the assets of Escient Technologies of Indianapolis, which is known for its FireBall music managers. Terms were not disclosed.

The fourth USBX deal involved the sale of a unit of Armor Holdings Inc., a maker of security products in Jacksonville, Fla., to Aerwav Integration Services Inc., of New York for stock. Terms were not disclosed.

Kate Berry

Record Spinner

Tower Records, the family-owned music chain that has endured declines in music sales for the past five years, put itself up for sale last week after hiring Los Angeles-based investment bank Greif & Co.

The Sacramento-based chain, founded in 1960 by Russ Solomon, has been closing stores and selling operations over the past year. An industry-wide slump in music sales and increased competition from discount chains made it tough for Tower to keep its niche in the market.

The retail chain’s parent company, MTS Inc. underwent a restructuring two years ago but was unable to stave off a sale.

Earlier this month, MTS had to delay a $5.2 million interest payment on bonds that were sold in 1998 and the company now has $358 million in debt. Bondholders appear to be in agreement on a sale of the company, said Lloyd Greif, president of Greif & Co.

Greif said he’s already received offers from retail chains and other potential buyers who see the opportunity to leverage the Tower brand name to sell a host of other items. Tower earned its reputation in the 1960s for breaking in new artists and launching new albums.

The chain now has 105 stores and has posted cumulative losses of $172.2 million since 1998, according to a filing with the Securities and Exchange Commission.

Kate Berry

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