MOUNT HOLLY – A mall operator has taken refuge in federal bankruptcy court in an attempt to avoid a foreclosure sale.
The owner of Evergreen Plaza has filed for Chapter 11 creditor protection, a group that includes a lender demanding more than $ 9 million secured by the Route 38 property.
Evergreen Plaza Associates LLC and three related companies filed in bankruptcy court Thursday, Sept. 9, “on an urgent basis” to block the foreclosure auction, according to a company lawyer.
But their biggest creditor wants a judge to dismiss the Chapter 11 action or, failing that, to allow the foreclosure auction to take place.
The creditor – a subsidiary of Pender Capital Asset Based Lending Fund I LP – claims that the Chapter 11 deposits are “nothing more than a naked attempt to abuse the bankruptcy process and further delay the lender.”
He argues that Evergreen Companies filed for bankruptcy protection “less than an hour” before a scheduled foreclosure auction.
The foreclosure sale, ordered by a state judge in April, had previously been postponed from June and July at the request of Evergreen companies.
The two sides were also divided over the likely outcome of the Chapter 11 action.
The Evergreen Companies, which share an address in Ridgewood, Bergen County, have “a strategy or plan for moving forward … which we believe will benefit all creditors,” wrote their attorney, Joseph Schwartz. of Morristown, in a letter to U.S. bankruptcy judge Christine. Gravelle in Trenton.
The letter also stated that Schwartz’s law firm “was only selected by (Evergreen firms) this week.”
But Los Angeles-based Pender Capital maintains that debtors “have no reasonable prospect of reorganization.”
Evergreen Firms borrowed $ 6.5 million from Pender Capital in March 2018, but stopped making payments in November of that year, according to the lender.
The loan is secured by the 90,000 square foot shopping center and adjacent vacant Lumberton property.
Evergreen Plaza has about half a dozen stores, including Dollar Tree and Jaron’s Furniture. But the mall also has about 20,000 square feet of vacant space, according to its website, and a closed Arby’s restaurant in the parking lot.
Legal notices announcing the original foreclosure auction date of June 2021 are displayed in at least two closed businesses, displayed on windows alongside “Vacant” signs.
Pender Capital filed a foreclosure action in February 2019 in Mount Holly Superior Court, the lender said in a court filing.
It says a state judge appointed a receiver for the property more than two years ago and issued a final foreclosure judgment in the amount of $ 8.6 million in September 2020.
The pandemic has delayed plans for a court-ordered sale and Evergeen companies’ debt is now over $ 9 million, the lender adds.
An attorney for Evergreen Firms declined to comment on Monday. A lawyer for the lender did not respond to a request for comment.
Jim Walsh covers public safety, economic development, and other topics for the Courier-Post, the Burlington County Times, and the Daily Journal.
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