A stalled Port Chester development is misusing bankruptcy protection for the second time in five months, an Elmsford finance company says, to avoid paying a $13.2 million debt.
The Galinn Fund asked U.S. Bankruptcy Court in White Plains to dismiss a petition filed by The Complex at Port Chester LLC, and to sanction the business for bad faith actions, in an emergency motion filed on July 23.
“As Galinn feared,” the motion states, “the debtor has made another bad faith filing in a last-ditch attempt to stave off the foreclosure action the day before the foreclosure sale was to occur.”
But Greenwich, Connecticut developer Michael Caridi claims that three investors are interested in putting from $16 million to $20 in the project, and this demonstrates that he can successfully reorganize, according to his Aug. 7 response to Galinn. All he needs is a “short breathing spell … to finalize the financing.”
From 2022 to 2023, Caridi borrowed $11.25 million from Galinn (named for George Galgano and David Linn), to build a 12-story, mixed use structure with 121 dwellings at Main Street and Broadway near the Port Chester train station.
But he defaulted on the loans by failing to pay monthly interest payments of $112,500.
It took seven years to get government approvals for new zoning and a site plan, Caridi states in response to the emergency motion. “Not surprisingly, this delay led to a major cash crisis” and the Galinn debt “grew to a level that was unmanageable.”
Caridi filed for Chapter 11 bankruptcy protection this past March. The court dismissed the case on May 22, after the U.S. Trustee’s Office pointed out that The Complex at Port Chester had no attorney and had not filed any of the required bankruptcy records.
Caridi petitioned for Chapter 11 protection again on July 22, in a 5-page, handwritten document in which he named Galinn as the only creditor.
“By filing another bankruptcy case with no new or different facts,” Galinn claims, “the debtor is simply using bankruptcy as a sword to once again forestall the foreclosure action and, in doing so, abusing the bankruptcy process.”
The Port Chester property has been appraised at $5.5 million, Galinn notes, or $7.7 million less than it is owed.
The property is hopelessly under water,” Galinn argues. “There is no reasonable plan of reorganization possible.”
The Complex at Port Chester has hired an attorney and on Aug 5 a revised bankruptcy petition was filed. It declared $19 million in assets and $17.1 million in liabilities, including the $13.2 million Galinn debt.
Galinn is asking the court to dismiss the bankruptcy case, or to allow Galinn to continue with foreclosure outside of bankruptcy court.
Galinn is represented by White Plains attorneys Robert L. Rattet and Jonathan S. Pasternak of Davidoff Hutcher & Citron. The Complex at Port Chester is represented by Brooklyn attorney Rachel S. Blumenfeld.
