A prospective client met with us and began to relate the facts of his involvement with a commercial property owned for years. The property’s tenant was a restaurant for many years, and at one time, the property’s architecture earned certification and preservation status. Eight years prior to meeting the client, the tenant vacated. The present owner did not pay attention to the property’s needs. Deferred maintenance accumulated. The city posted citations, blight signs based on the graffiti, squatters, and the homeless.
Years later, the property is now in the path of progress. After many years where no activity existed, fresh development is returning to the area: some new retail, a mini warehouse, etc. The new neighbor tenants helped create increases in land value and rents, where, for some time, the area was economically flat. Sounded interesting. How can we help you?
We confirmed the city’s citations were based on acts of vandals, the moving in of squatters, the homeless and graffiti artists. The city was compelled to issue violations requiring repairs. There are code provisions allowing the governing body to cite violations where there are life, health and safety issues.
In fact, the city has the ability to go to court to have a receiver installed to take over the property, borrow money with court consent, and proceed to get the property up to compliance. The prospective client did not believe this could be done without his consent. All of this is what was happening.
However, the prospective client wanted to now be part of the act and take control of the situation. For some reason, with legal counsel, he elected to put the property into bankruptcy. He related that he felt this act would protect his rights, get the receiver removed who was appointed by a State Court. I presume he thought the property would come back to his control and possession. Unfortunately for the prospective client, that is not how it works.
Sometimes Murphy’s Law applies: what can go wrong will go wrong. The client learned and related how he felt, however, the courts, the receiver, and the trustee simply didn’t trust him. I listened and asked some questions.
The prospect felt he was being singled out by all concerned. He expressed the desire to recoup a good portion of the fees charged by the receiver, as well as what he felt were overcharges for securing a loan, etc. The prospect client was frustrated and angry. He wanted the courts to work with him to reduce his costs. I could not assure him this could happen.
I did not see how I could promise a resolve to his challenges with the city, Federal Bankruptcy Court, or the State Court, in addition to getting a discount on the loan the court approved for the receiver, who borrowed to manage the property. We could not get him to understand the process, nor how his idea to settle up could be easily ascertained.
We could not assure the result.
We declined the case.