The prospective buyers of the Statler Towers have an additional two months to close the deal.
U.S. Bankruptcy Court Judge Carl L. Bucki granted a request from New Buffalo Statler Redevelopment for a 60-day extension at a hearing Tuesday. The group has until Nov. 30 to complete the purchase.
The deal was initially supposed to close Aug. 28. Just before that deadline, Bucki granted a 30-day extension until the end of this month, but at the time he questioned whether the group would return seeking a new deadline.
The prospective buyers are led by William Koessler, Thomas Zawadzki and Richard Sterben. They estimate the extensive renovation they plan for the site will cost up to $100 million.
David Pfalzgraf, an attorney for New Buffalo Statler Redevelopment, said the group is working with federal, state and local economic development officials on securing incentives to make the project work. The group also is negotiating with a "national developer," whom he did not identify, about coming aboard.
Pfalzgraf told the judge that the group was dealing with a project that was complex and broad in scope, requiring the additional time, but remains determined to close the deal.
He cited the financial steps the group has taken since prevailing with a $1.3 million bid at the Aug. 12 auction as evidence of its commitment. It will make an additional down payment of $261,000 this week that would be credited against the purchase price at closing.
The bankruptcy court-appointed trustee in the case, Morris Horwitz, supported the extension request.
Garry Graber, an attorney for Horwitz, said giving the prospective owner more time was the most viable option at the moment. He noted that no other would-be buyers have contacted Horwitz wanting to buy the Statler, amid New Buffalo Statler Redevelopment's publicized struggles to close the deal.
"The big worry here is, of course, that we would hold another auction and nobody will come," Graber said. "It's not as if this auction [in August] was oversubscribed."
New Buffalo Statler Redevelopment made the higher bid of the only two bidders who participated in the auction. The runner-up, Gail Pirincci, was refunded her $100,000 deposit after she asked for it last month.
Raymond Fink, an attorney for Mohmoud al Issa, father of previous Statler owner Bashar Issa, blasted New Buffalo Statler Development's failure to close the deal. He urged Bucki to hold another auction and block that group from participating.
Fink claimed the group lacks the "financial wherewithal" to complete the process. "There's nothing," he said. "There's conversation. There's oral argument. It's all vapor."
Fink's client holds a disputed $4.5 million mortgage on the Statler and was not allowed to make a credit bid at the Aug. 12 auction.
Pfalzgraf told Bucki he viewed the 60-day extension as a last shot for the New Buffalo Statler Redevelopment to close the deal.
"This is really it for us," he said. "If we can't complete what we started [since winning the auction], I'm fairly certain the trustee and his counsel would not agree to another extension. We understand the stakes here very clearly, your honor."
Bucki said the group's pledge of an additional $261,000 on top of its previous financial commitments, along with Horwitz's position, contributed to his decision to extend the deadline. "With that kind of money, almost a half-million dollars, we're talking about something that will protect creditors substantially," Bucki said.
After the hearing, Horwitz said he has "been confident all along that this group will find a way to close this transaction."
As part of the extension, New Buffalo Statler Redevelopment will continue to cover costs to operate the Statler, as it has since Sept. 1. That includes maintaining insurance on the property, which Bucki said was critical.
In court papers submitted before Tuesday's hearing, attorneys for New Buffalo Statler Redevelopment had warned of doom for the downtown landmark if the extension request were denied.
Had responsibility for the Statler reverted to the trustee, he would have lacked the necessary funds to keep it running, and the building would have had to be shut down, the attorneys said. And without revenues to pay for utilities, the Statler would have lacked protection against the upcoming freezing weather, greatly diminishing its value, they said.
The property's previous owner, BSC Development of Buffalo LLC, was forced into bankruptcy in April.