CLARKSBURG — Plans for a new bridge to access Crossings Mall in Elkview made no progress despite a 10-hour hearing in U.S. bankruptcy court on Thursday.
Judge Patrick Flatley didn't make a decision on any of the three motions being considered, which included the mall owner, Tara Retail Group, seeking approval of post-petition financing. Under that proposal, Bridgeport-based Applied Construction Solutions (ACS) would fund and build the new bridge to Crossings Mall for $1 million. In addition, SLS Land and Energy Development would complete the engineering work in the amount of $111,595.
However, there was some misunderstanding between the court and David Alvarez, president of ACS, about the repayment terms under the post-petition financing agreement. Alvarez said he expects a first lien position, which means he would be paid back first once the property begins generating cash flow again. Alvarez added that while he'd require to be paid back in full over the next 24 months, “fast pay means fast friends. The sooner the better.”
Alvarez added that he would want 90 percent of the gross rent revenue per month once the mall is back up and running. Under the terms of the repayment plan, Tara Retail's lender, which sued the company last year after it defaulted on a $13.6 million loan, would not begin to see loan payments resume until 2019. Tara is being represented by Steven Thomas, of Kay Casto and Chaney.
ACS also was one of five firms that submitted a bid to build a new bridge through Martin Perry, who was appointed receiver of the property in December by U.S. District Judge Thomas Johnston. But those efforts were postponed indefinitely after Tara Retail, headed by developer Bill Abruzzino, filed for bankruptcy in January, minutes before a trustee's sale of the property was set to begin.
Because the terms of the post-petition financing still were unclear, Flatley tabled any decision on the motion until the defendants redraft the proposal under more specific repayment terms. The deadline for that is next Friday.
Two other motions made on behalf of Tara's lender, COMM 2013, also were deliberated Thursday but Flatley made no ruling on them. The first was a motion to dismiss the bankruptcy case entirely, while another was an emergency motion for relief from the automatic stay. The motion for relief would allow work on the new bridge to begin as the bankruptcy proceedings are under way.
Chris Schueller, representing the lender, argued that the Crossings Mall currently has no equity.
“The debtor has to build the bridge, address tenants' issues, repay the [ACS loan], all with no equity in the property,” he said.
Schueller also noted what he called the “elephant in the room:” the widespread closure of Kmart and Sears stores across the U.S. over the past few months.
Schueller said the motion for post-petition financing is “ludicrous” and “completely naive.”
The most recent filing by Schueller alleges that even if the Crossings Mall property generated net cash flows at the pre-flood level starting on Aug. 1, it only would accumulate $1.86 million over the next year.
He also noted that the mall's tenants are going to ask for accommodations such as rent concessions and other aid before they can resume operations.
An affidavit filed this week by Perry listed at least four Crossings Mall tenants, including anchor tenants Kroger and Kmart, that required varying levels of rent abatement and other accommodations in order to remain at the property.
When he took the stand on Thursday, however, Abruzzino made it clear that he has no problem finding new tenants if the existing ones don't agree to his terms.
For example, he said, tenants won't have to pay rent for up to 60 days after the bridge is built while they restock inventory and address other issues prior to reopening.
Abruzzino, 82, said another one of his companies, Plaza Management, handles exterior maintenance around the mall, such as paving repairs and snow removal. But tenants are responsible for the interior of their spaces, he said. Abruzzino said it “wouldn't bother me” to find new tenants if needed. “We don't have any [needed] tenant repairs,” he said.
In fact, the Advanced Auto building has structural issues that allegedly cost up to $600,000 to repair, according to court testimony.
“If they want to move out, I can get a new tenant tomorrow morning,” he said.
Abruzzino said he thinks the mall property will be worth $19 million within three months after reopening. He added that he would use money from other companies he owns to help pay off the debt to ACS, if needed.
Reach Elaina Sauber at elaina.sauber@wvgazettemail.com, 304-348-3051 or follow @ElainaSauber on Twitter.