HNA owes SL Green $185 million in surprise bankruptcy – Commercial Observer

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That HNA group-supported unit that owns 245 Park Avenue owes SL Green Realty a payout of $185 million, an arbitrator has ruled.

The referee, former judge L. Priscilla Hall, noted last April that SL Green was entitled to the money because its contract to invest in and manage the 47-story tower protected SL Green from potential losses due to bankruptcy. Hall also ruled that SL Green should be reimbursed $856,000 in attorney and arbitration feesaccording to New York state court documents released Friday and first reported by the Wall Street Journal.

The bankruptcy filing heralded the less than amicable end of SL Green’s relationship with HNA’s subsidiary PWM property management. PWM, which owns the New York City Tower between East 47th and East 46th Streets and a building in 181 West Madison Street in downtown Chicago, filed for bankruptcy in November, blaming SL Green for failing to find a replacement Major League Baseball (MLB) with another tenant at 245 Park.

SL Green, which invested $148 million in the building in 2018, denied the allegations. say before Commercial Observer that it was PWM’s own failure to renovate the property and add amenities that led to the bankruptcy. Separately, PWM’s parent company, HNA, was placed under bankruptcy administration in China last year due to its heavy debt burden.

“The accusation that [SL Green] Deliberately not finding a replacement tenant for MLB, which was a very important tenant in the building… [is] a nonsensical argument that has absolutely no basis and the referee agreed,” he said Markus Resslera partner at Kasowitz Benson Torres who represented SL Green in the arbitration.

PWM also claimed in bankruptcy filings that SL Green wanted to fail in replacing the baseball organization so they could take over the property. SL Green owns a 49 percent interest in one of Park’s 245 debtor companies, 245 Park JV LLCwhich holds half of the outstanding $568 million in mezzanine debt and is the loan servicer, CO previously reported.

Early in the Chapter 11 process, PWN announced plans to sever ties with SL Green. A bankruptcy court judge ruled in December PWM could reject his rental and property management contract with SL Green, and PNW replaced the company with new mark. The judge also ruled that PWM had reasonable grounds to fear a forced sale and could remain under judicial protection.

The settlement was a win for the cash-strapped PWM, who no longer had to pay out their contract with SL Green. The company at the time had $2.53 billion in assets compared to $2.19 billion in liabilities and could have been forced to pay $19 million to its mortgage lender if it couldn’t find a tenant could replace MLB. That Rockefeller Foundation took Part of the MLB office in 2020but the organization’s lease expires this year with no replacement in sight, The only true reported.

The latest arbitration award represents a pretty penny for the struggling HNA, but Ressler expects the verdict to be approved and SL Green paid for suing an HNA corporation that has not filed for bankruptcy.

HNA has previously argued that the bankruptcy filing was intended to prevent SL Green from recovering its investment. However, Hall noted that while bankruptcy filings routinely interrupt legal action against companies, it was not a requirement. She also said HNA failed to show that the bankruptcy court issued a payment pause, known as a stay order, for the non-bankrupt company.

Celia Young can be reached at [email protected].

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