(Bloomberg) -- A handful of Madison Avenue condominiums located in a luxury high-rise building near the Empire State building have wound up in bankruptcy and will be sold in Chapter 11.
The residences include five penthouses, five non-penthouse residential units and two commercial units, according to developer Madison 33 Owner LLC, which filed Chapter 11 on Monday. Some of the units at 172 Madison Avenue aren’t fully finished.
The company said it will cost about $13.5 million to complete the penthouses “before they can be sold at optimum value.” The fair market value of the units “once fully improved” will be at least $100.6 million, Madison 33 Owner said.
The business sought court protection months after an affiliate behind a former residence once dubbed “Le Penthouse” did the same to halt a foreclosure sale. The company is connected to real estate development firm Tessler Developments, according to court documents.
Madison 33 Owner “is commencing a robust marketing campaign to sell or refinance the remaining units through a plan of reorganization in the bankruptcy,” Jonathan Pasternak, the company’s bankruptcy lawyer, said. The rest of the units in the building have been sold, Pasternak said.
The company said in a court filing that it has sold the other 60 units for more than $162 million, the net proceeds of which were used to pay down debt.
The business has been involved in litigation with an affiliate of private equity firm ARC PE, which claims Madison 33 Owner defaulted on debt used to acquire and develop the property. Filing bankruptcy immediately pauses the litigation, giving Madison 33 Owner time to market the units in Chapter 11.
The condos join a handful of notable residential properties that have ended up in Chapter 11 in recent years. A bankrupt Los Angeles mega mansion called “The One” was sold in Chapter 11 for $141 million in 2022. Last year, natural gas tycoon Charif Souki put his sprawling Colorado ranch into bankruptcy amid a fight with lenders.
The case is Madison 33 Owner LLC, number 24-11463, in the US Bankruptcy Court for the Southern District of New York.
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