A part-owner of the former Domino Sugar factory claims he recruited an unnamed investor to buy up his partner’s massive debt and salvage an ambitious plan to bring 2,200 units of housing to the Williamsburg waterfront.
Developer Isaac Katan, who owns half of the proposed project, has a “white knight” capable of saving the financially troubled $1.2 billion development from foreclosure after Domino partner Community Preservation Corporation Resources defaulted on a $120 million loan, Katan’s attorney, Y. David Scharf, said in court on Thursday.
“The Katan Group has lined up a partner to pay off the lender and recapitalize the project,” said Scharf, whose client would not disclose the identity of the outside investor.
Katan sued his development partner last month in an attempt to prevent the ailing housing financier from renegotiating the loan it took out in 2007 with a third-party lender — claiming Community Preservation Corporation Resources committed fraud and breach of contract in its dealings with the backer.
Katan is seeking an injunction to halt the refinancing, which is only the latest problem for a beleaguered development that ran into trouble after the city signed off on a controversial plan to allow residential development on the site nearly two years ago.
Real estate insiders say the 11-acre site is on the market, but Community Preservation Corporation Resources claims that it only wants to sell off a part of the giant waterfront project.
As Community Preservation Corporation Resources’s debt — and Katan’s consternation — grew, the company sought a slew of investors to help stabilize the project, court documents indicate.
Last year, Katan submitted several potential bidders, which Community Preservation Corporation Resources vice president Susan Pollock vetted, only to have each deal fizzle out, according to Pollock’s affidavit.
Both partners have said publicly they want to stick to stick to their Domino plan, but real estate sources say flipping the site could prove to be extremely lucrative.
Pollock dismissed Katan’s claims of malfeasance as baseless and invalid.
“There was absolutely no evidence to support any claim that Community Preservation Corporation Resources had engaged in any improper actions and Katan did not even attempt to provide any evidence of its own supportive of its accusations,” said Pollock. “Community Preservation Corporation Resources remains confident that the court will deny Katan the injunction it is seeking.”
The judge did not make a ruling on Katan’s injunction request. The next court date is May 4.
©2012 Community News Group
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