EBaum's Webster Ventures LLC is proposing a compromise to head off a bank foreclosure of its redevelopment project on Main Street in the village of Webster.
In a Bankruptcy Court motion filed last week to oppose Genesee Regional Bank's motion seeking permission to foreclose, eBaum's Webster Ventures proposes to boost monthly payments after it signs more tenants.
Genesee Regional Bank president and CEO Philip Pecora declined to comment.
A hearing on the bank's foreclosure request has been postponed twice at the request of eBaum's Webster Ventures. In an Oct. 1 letter to the court, eBaum's attorney Sammy Feldman of Silver & Feldman asked that a hearing rescheduled from August to Oct. 4 be moved to the end of this month. The postponement was needed because eBaum's Webster Ventures had failed to supply a needed property appraisal but the bank would not agree to let the matter ride until November, Feldman said.
Overseen by developer Neil Bauman and nominally headed by Bauman's son and business partner, Eric, eBaum's Webster Ventures has been redeveloping the 325-foot, four-parcel strip since 2007.
Initially financed in part with proceeds from the $17.5 million sale of a comedy website that Eric Bauman developed as a teenager, the Webster project filed a Chapter 11 bankruptcy petition in April, stating assets of $4 million against debts of $3.25 million.
In a 2007 interview, Neil Bauman described the project as one that would refashion the village's main drag, turning it into a shopping and restaurant destination similar to Pittsford's Schoen Place or Fairport's canal-side shops and eateries.
Prime Steakhouse, an upscale restaurant opened and until recently run by the Baumans, is an anchor of the development. Other tenants include Rubino's Italian Submarines and Sports Pub and a Western Regional Off-Track Betting Corp. betting parlor.
With the national recession and a significant slice of the Webster project's space still vacant, eBaum's Webster Ventures hit a speed bump in 2008, Bauman said in April. Under increasing pressure from Genesee Regional Bank, he said then, the project sought Chapter 11 protection primarily to halt a foreclosure action the lender had started in January.
In July, Bauman put Prime Steakhouse into a separate Chapter 11, which he said was needed to halt the eatery's imminent seizure by state tax officials. That case was dismissed in less than a month after the restaurant failed to comply with a court order calling for it to supply missing information. Then, in August, Bauman sold Prime Steakhouse to restaurateur Stergios Kotorlis, the owner of two high-end Rochester eateries, Eros in the East End and La Luna at High Falls.
The Prime Steakhouse Chapter 11 case had served its purpose of keeping the taxing authority at bay, so he had deliberately let that case be dismissed, Bauman said in August. Proceeds from the sale to Kotorlis had gone to pay the eatery's delinquent taxes. With the restaurant turned into an eBaum's Ventures tenant instead of an operating expense, the sale would help stabilize the project, Bauman said. He was then in negotiations with several prospects who might lease the roughly 30 percent of the project's remaining vacant space, he added.
The same week the restaurant changed hands, however, Genesee Regional Bank filed a Bankruptcy Court motion to lift the automatic stay put on the foreclosure by eBaum's Webster Ventures' Chapter 11 filing. The picture the lender paints of the project in those court papers is of a development under water with little hope of surfacing.
Genesee Regional Bank started the January foreclosure action after the LLC missed its December 2011 loan payment, prompting the bank to call the loan, GRB's filing states. Acknowledging that eBaum's Webster Ventures had since paid $45,000 in three equal installments in May, June and July, the bank maintained that the payments did not even cover the interest due on the development's $3.25 million loan. It had offered to drop the foreclosure if eBaum's Webster Ventures would pay $23,331 a month, an amount that would cover the $744.37 a day in interest piling up, but the LLC had rejected the deal, the bank states in the filing.
The lender's court papers state that the LLC has no equity in the project. As the bank figures it, subtracting $93,000 owed in real estate taxes and $250,000 in closing costs from the eBaum's Webster properties' $3.2 million top value would leave net proceeds of roughly $2.9 million in a sale, leaving the LLC some $253,000 short of the $3.1 million it would need to pay off the loan.
In a countermotion filed this month, eBaum's Webster Ventures attorney Feldman offers an alternative view: Genesee Regional Bank's $250,000 estimate of closing costs is excessive, and the eBaum's Webster real estate is worth $4.5 million, not $3.2 million, so the $15,000 a month that Bauman is ready and willing to pay is more than adequate to protect Genesee Regional Bank's interests.
A year ago, Feldman states in the Oct. 1 filing, Genesee Regional Bank valued the properties at $4 million, and now it has failed to explain why their worth dropped by $750,000. Feldman also states that a purchaser is ready to buy one eBaum's Ventures parcel and the proceeds of that sale would be used to pay down the loan's principal.
Bauman expects to have leased the development's vacant space by the end of the year, definitively stabilizing the project, the attorney adds.
A hearing on the bank's lift-stay motion is slated for the end of this month.
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