Judge Rules in Favor of Astani Condo Sales

A U.S. bankruptcy court judge ruled this week that the sales of 77 condos at the Concerto development in downtown can be completed despite opposition by the Federal Deposit Insurance Corp.

The judge also said that the expected $31 million in proceeds can be used to fund the project’s completion, according to developer Sonny Astani.

However, the project’s lender, a partnership of investment company Starwood Capital Group LLC and the FDIC., was given two weeks to review and approve the construction budget of the $300 million downtown development, Astani said.

The project’s 77-unit, six-story loft building is ready for occupancy, but a 30-story tower next door with 271 units remains incomplete.

Astani placed his project at Figueroa and Ninth streets into Chapter 11 bankruptcy in an unusual move Sept. 17 after construction lender Corus Bank was seized by regulators. The sales had been held up by liens the Chicago bank has on the units, and the FDIC was unresponsive to requests to approve the condo sales.

The federal agency has maintained the sale prices were too low and thus were not maximizing the value of the failed bank’s assets. Starwood is a Greenwich, Conn.-based investment firm that purchased Concerto’s debt when it acquired the assets of Corus.
Despite the seeming legal victory, Astani does not view the development positively. He noted that Starwood has until Nov. 17 to file opposition to his construction budget, and the firm may choose to do so if it doesn’t believe completion of the project would be in the firm’s financial interests.

“It’s an unpleasant situation to be in, said Astani, who noted he makes $1 million in interest payments monthly on his loan.

Starwood did not return calls seeking comment and FDIC spokesman David Barr said the agency does not discuss ongoing legal matters.

The judge’s order in the matter has not been filed with U.S. Bankruptcy Court as of Oct. 30, according to a federal database that maintains court documents. Astani expects it will be filed Nov. 2. Once it is signed, Astani said buyers can close their escrows and move into their completed loft units as soon as possible.