Thursday, February 2, 2012

Attorney for EpiCentre developer Afshin Ghazi withdraws citing litigation's ongoing cost

An attorney representing EpiCentre developer Afshin Ghazi in bankruptcy court has withdrawn from the case saying the long-running, contentious court proceedings are draining Ghazi financially.

"I have thought for years that money is what controls politics," attorney David Badger told the court Thursday afternoon, when U.S. Bankruptcy Court Judge George Hodges approved Badger's request. "Money is what controls the outcome of litigation as well. You can outspend (a defendant) until they are defenseless."

"I'm in a position where they, quite frankly, don't have the finances to stay in," Badger said referring to Ghazi and fellow developer George Cornelson III. Badger also said he had "considerable accounts receivable."

Ghazi and Cornelson have been involved in heavy court battle since July 2010, when their two limited liability companies that own the EpiCentre, Pacific Avenue and Pacific Avenue II, filed for Chapter 11 bankruptcy protection to avoid foreclosure.

The uptown entertainment project's original lender, Regions Bank, had recently started foreclosure proceedings when a $93.9 million loan came due.

Since then, Regions Bank has sued the developers, questioning how Ghazi and Cornelson spent their loan money and kept records. Ghazi and Cornelson denied claims of self-dealing.

That case was dropped after Regions in November 2010 sold the construction note to Blue Air 2010, a limited liability company. Since then, a new company has been hired to manage and operate the 302,000-square-foot entertainment complex at Trade and College streets.

Things seemed to progress more smoothly until October, when the EpiCentre's new lender sued the project's developers, accusing them of wrongfully diverting money from the troubled entertainment complex before filing for bankruptcy protection.

Blue Air's lawsuit claims Ghazi, Cornelson and others "manipulated and falsified" bookkeeping records and transferred assets to "various insider companies" before the project filed for Chapter 11 last year.

The lawsuit also claims the debtors made "numerous false statements" in their pleadings and court filings. Blue Air is arguing that Ghazi and Cornelson are responsible for returning the EpiCentre's assets, according to court documents.

Blue Air and the EpiCentre's owners have said they were close to agreeing to a reorganization plan this fall. The plan would have released the project from bankruptcy protection.

But the plan fell apart in October when Blue Air changed its terms, according to the court filing by 210 Trade, a Ghazi-affiliated company. 210 Trade owns valuable air rights above the EpiCentre. These air rights, which are connected to potentially millions of dollars in parking revenues, are currently being examined by the bankruptcy trustee appointed to investigate the case.

"Blue Air thereupon proceeded to wrest control ... and began what is a transparent effort to obtain what it could not obtain through negotiation or blackmail ... parking revenue associated with the Air Rights Tract, " the documents say. "Whether due to lack of due diligence or otherwise, it is clear that Blue Air has buyer's remorse and that it does not like the deal it negotiated."

Currently, attorneys in the case are doing discovery and conducting numerous depositions.

A confirmation hearing on the reorganization plan is expected to be held later this month.

5 comments:

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Anonymous said...

Is this two stories mashed together? It appears to be a couple paragraphs about the attorney pulling out added to an older story about the actual legal mess.

Anonymous said...

His has destroyed many construction companies, leaving a lot of construction workers without work. Put Ghazi in jail, we all will see how fast he will repay the money.

bankruptcy in illinois said...

This is always harassing that we are continuously going to court for saving our concerns but we cant get any result. It is a good post about topic.

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