|By Jay Fitzgerald, Boston
HeraldMcClatchy-Tribune Regional News
Aug. 28, 2010--Prudential Insurance Co. is pushing to foreclose on the bankrupt W Boston Hotel and Residences, putting more than $10 million in city loan funds at risk if high-end condos at the swanky complex in the Theater District are sold off at bargain-basement prices.
Prudential, which originally sunk $192 million in the W Boston, openly mocked developer Sawyer Enterprises' plans to rent out 25 of the approximately 100 unsold units within the complex, saying it would merely put wear-and-tear on condos and make them less attractive for future sales because they would be "stigmatized as rental property."
"The debtor has demonstrated no ability to mount a fresh sales campaign to rehabilitate its business or otherwise reorganize nor does it have any prospects for such reorganization on the horizon," Prudential said in a recent court filing.
Sawyer, operating the W under the name SW Boston Hotel Venture LLC, hit back in filings that its plans to lease condo units for six to 12 months "will serve to strengthen its income stream, bolster its marketing efforts and better its chances of structuring a viable (bankruptcy) reorganization."
Sawyer also rejected arguments that it has mismanaged the entire project, claiming its costs as of April were within $10,000 of intial estimates, according to filings.
In a statement, Sawyer dismissed Prudential's attempt to force a foreclosure as "typical" for such bankruptcy proceedings.
"As we have said from day one, we intend to pay all our creditors and claims in full," Sawyer said.
A spokeswoman for Mayor Thomas M. Menino's Neighborhood Development Department -- which last year issued a $10.5 million loan to the developer to build out the final portions of the 26-story structure, including a spa, restaurant and bar -- downplayed the chances of a court-ordered foreclosure.
But the city, which has received $260,000 in payments from the developer so far, sounded alarmed in court filings about the prospect of Prudential taking over the W Boston and selling off units at cut-rate prices.
"It would be simply unconscionable for Prudential to wipe out, through foreclosure proceedings, all of the value that it has watched the city of Boston pour into the project," argued an attorney hired by the city.
Selling off the units via foreclosure would allow Prudential to benefit from the city's investment while "wiping out the city of Boston's interest in the project completely," the filing said.
The next court hearing in the case is in November.
To see more of the Boston Herald or to subscribe to the newspaper, go to http://www.bostonherald.com.
Copyright (c) 2010, Boston Herald
Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com, e-mail email@example.com, or call 866-280-5210 (outside the United States, call +1 312-222-4544). NYSE:PRU, NYSE:PUK,