Irvington builder Joseph DeNardo filed for bankruptcy protection last week, two days before a foreclosure auction was to be held on his latest townhouse project, Marker 27.
DeNardo Capital Management and DeNardo Capital II filed Chapter 11 reorganization petitions on Feb. 16 in U.S. Bankruptcy Court, White Plains, declaring $10 million to $50 million in assets and liabilities.
The goal, DeNardo states in an affidavit, is to find new financing that will enable completion of the Marker 27 condominium project in Irvington, pay off creditors and realize “millions of dollars invested and years of hard work.”
If the project cannot be refinanced, he said he will try to sell the property.
Marker 27, also referred to as The Walk at MarkeRidge, is on a plateau overlooking the Hudson River, near the Irvington train station. Plans call for building 27 townhouses.
In 2018, the DeNardo companies refinanced the project with an $18 million loan from two lenders. Silver Point Finance of Greenwich, Connecticut, is the agent for the lenders.
The loans were backed by the Irvington project and a property in Long Island City, Queens, and personally guaranteed by DeNardo and his wife, Sylvia.
After a deal to sell the Long Island City property fell through in 2019, the lenders issued a default notice, according to DeNardo, and demanded new agreements that imposed “harsh restrictions, onerous terms and costly fees.”
Fearing that his Irvington project would be derailed, he signed the agreements.
DeNardo found a new buyer for the Long Island City property, at $8.2 million, but the March 2020 closing was halted because of the coronavirus pandemic. In June, the same buyer offered $7.6 million, and the closing was scheduled for Sept. 30.
Silver Point issued a new default notice before the closing and demanded full payment on the loan and 24% default interest retroactive to March 2019.
Then Silver Point filed a foreclosure lawsuit on the Long Island City property and gave notice of an auction to sell the DeNardos”™ interest in DeNardo Capital II.
The closing was canceled.
DeNardo had also been negotiating a deal with a “well-known real estate developer” to buy the Irvington property, he says. But the prospective buyer stopped negotiating this past October, apparently at the behest of Silver Point.
Silver Point filed a foreclosure lawsuit on the Irvington property in October and an auction was scheduled for Dec. 17 and then rescheduled for Feb. 18.
“Faced with the possible loss of ownership and control of the project,” DeNardo states in his bankruptcy affidavit, he filed the Chapter 11 petitions, two days before the auction.
He said the protection of bankruptcy court “will help put an end to ”¦ bad faith tactics.”
The DeNardo companies use harsher language in a lawsuit filed in December against Silver Point and the lenders, describing them as “loan to own lenders” who created sham defaults so they could seize the highly valuable Irvington project.
DeNardo discontinued the lawsuit a week after it was filed.
Silver Point describes the DeNardo companies as engaging in a “continued pattern and practice of enabling defaults,” in the foreclosure lawsuits.
The DeNardo companies had failed to complete construction of certain townhouses in Irvington by last June, for instance, failed to discharge mechanics liens and failed to maintain insurance on the properties.
Eastchester attorney Dawn Kirby represents the DeNardo companies.
Manhattan attorneys Mark S. Lichtenstein and Jamie B. Shyman, and Armonk attorney Prassana Mahadeva represent Silver Point”™s interests in the bankruptcy cases.
