Things took a turn for the worse for the moribund Rivercove apartment complex this week, after a federal judge sided with the complex's creditors and sent the property into foreclosure.
U.S. District Court Judge Jerome B. Simandle issued a summary judgment Tuesday in Camden against Grove Street Realty Urban Renewal, which owes $34,574,558 to mortgage holder GE Business Financial Services (GEBFS)–more than $2 million more than the original loan amount from 2007.
The foreclosure follows a series of complex legal moves in the past several months, all aimed at collecting the balance of the loan.
The original foreclosure filing came 17 months ago, in May 2010, but was put on hold after Grove Street filed for bankruptcy not long after.
That didn’t stop attorneys for GEBFS, however.
Court documents show they went directly after Thomas Hedenberg and Ray Tresch, managing partners for Grove Street, filing for a summary judgment against the pair in Illinois district court over a loan guarantee the two men signed along with the original loan agreement.
That motion was resolved in April, after a judge ruled in favor of GEBFS, which started a domino effect – the foreclosure motion was back on the table on May 25 of this year, and attorneys for GEBFS pushed for Rivercove to go into receivership at the end of June, just a week after Grove Street appealed to the West Deptford planning board to lift the complex's age restriction, citing dire straits and a need for action.
“At this point, it’s survival for us,” Hedenberg, who did not return a call Thursday seeking comment, said at that June meeting. “We need to have something happen with that property.”
The court granted the receivership motion, and Trigild, Inc., took over as receiver on Aug. 16, not long after Grove Street's bankruptcy filing was dismissed in district court.
In their defense, Grove Street's attorneys argued GEBFS failed to act in good faith by denying the company $200,000 from a reserve interest account to pay for marketing, as well as failing to pay insurance premiums from an escrow account, which led to the complex's insurance lapsing for about three days.
Simandle concluded there was no breach of good faith, however, and also dismissed an argument from Grove Street's attorneys that the creditor's name change–from Merrill Lynch Business Financial Services to GE Business Financial Services – created a dispute of fact as to who held the mortgage.
Though the property is going into foreclosure, West Deptford administrator Eric Campo said the township’s priorities are clear, with Grove Street already owing more than $300,000 in back taxes and an annual $386,000 payment in lieu of taxes (PILOT) program in place.
“Obviously, the town's issue will be making sure the tax dollars are paid,” he said.
Campo hadn’t received a copy of the foreclosure decision, but had already had contact with Trigild representatives about the receivership, though he said he didn’t know exactly how things would progress from here.
The to end the age restriction on the property is one of the things up in the air now, though Campo said whatever company comes out of the process with a controlling interest would have to do the same things Grove Street would have – present an amended site plan and build a case from professional testimony on how lifting the restriction would affect both Rivercove and West Deptford.
“We'll see how it plays out,” Campo said. “We'll work with them through the rest of whatever issues remain. In the final analysis, the town's still going to get its taxes.”