A court-appointed receiver is taking over day-to-day operations at the Statler. State Supreme Court Justice John M. Curran named businessman Stephen Leous as receiver and attorney Bruce Zeftel as special counsel for the property.
Stressed developer Bashar Issa had plans to convert the circa-1923 former hotel into a mix of hotel, office and residential space at a cost of over $60 million. Issa was only able to complete elevator repairs and lobby improvements at a reported cost of $6 to $8 million before running into financial problems here and in native England. Park Lane Catering filed suit against BSC Development over the condition of the building and lost business.
Jim Fink has the details of the yesterday’s court action in Business First:
Leous and Zeftel will handle such matters as collecting rent, making payments and marketing the building.
The receivership does not include a 44-foot luxury yacht acquired by BSC Development’s owner, Bashar Issa, that remains stored in Western New York.
Park Lane Catering sought the court-appointed receivership after the Statler fell into what legal documents described as a “depleted and dilapidated state.”
Curran made his appointments following a series of hearings that began late last year and concluded Friday afternoon. The hearings included a visit to the Statler by Curran.
Leous and Zeftel will be paid from rents collected from tenants.
Issa’s troubled ownership could be ending soon:
David Pfalzgraf Jr., Park Lane Catering’s attorney, said William Koessler, Park Lane Catering’s owner, is attempting to put together an investment group to purchase the Statler. If there is a deal, it will be completed within seven to 10 days.
“The receivership is the first step in an orderly transition to a group led by Mr. Koessler,” Pfalzgraf said.
However, if a deal cannot be struck, Pfalzgraf said several of the Statler’s creditors may opt to put the 18-story, 550,000-square-foot building into involuntary Chapter 11 proceedings under the U.S. Bankruptcy Code. To begin such a proceeding, only three creditors are needed under federal law.
“We think there are plenty more than three,” Pfalzgraf said.
BSC Development purchased the 18-story Niagara Square landmark in August 2006 for $3.5 million. BSC became involved with a dispute with Laborers Local 210 over wage rates at the project and work on the project ceased last April after failing to secure a construction loan.
In July, Issa sold the site of his proposed CityTower project at 85 W. Mohawk Street to Mark Croce’s Elmo Development LLC for $2.1 million. An earlier deal to sell the Statler to a partnership headed by Toronto businessman Howard Hurst and Erie, Pennsylvania-based hotelier Scott Enterprises fell apart.