|By Thomas Grillo, Boston
HeraldMcClatchy-Tribune Regional News
Nov. 14, 2011--Over the objections of its biggest creditor, a federal judge has ruled in favor of the Residences at W Boston's request for a Chapter 11 reorganization plan which will allow the luxury property to emerge from bankruptcy later this month.
The U.S. Bankruptcy Court judge's decision today "will allow all of our creditors to get paid in full," said Carol Sawyer Parks, CEO of SW Boston, developer of the 123-unit condo and hotel tower built in Boston's Theater District in 2009.
"Fortunately, we have been able to maintain our successful sales level during this time because of the strength of the downtown Boston housing market and the W brand," Parks, daughter of Hub taxi magnate Frank Sawyer, said in a statement. "We will continue our commitment to providing luxurious amenities and service to all of our residents."
Attorneys for Prudential Insurance Co. of America sought to foreclose on the 26-story glass Stuart Street tower last fall, arguing that the developer defaulted on a $180.8 million mortgage. SW Boston filed for bankruptcy in April 2010.
Judge Joan Feeney rejected Prudential's foreclosure bid along with the company objections to the reorganization plan. Emanuel Grillo, the attorney representing Prudential, could not be reached for comment.
In today's ruling, Feeney was persuaded by the arguments of Kevin Ahearn, the real estate broker in charge of selling the units. She wrote that during the 14 months prior to the initial hearing, the W generated net sales proceeds of $33.7 million, compared to their projection of $34.3 million. Feeney also noted that from Nov. 1, 2010 and June 30, 2011, the W sold 22 more condos, netting another $25 million.
"The credible evidence submitted at the confirmation hearing compels a finding that the (reorganization) plan is feasible," Feeney said in her decision.
As part of its financial overhaul, SW Boston sold the hotel to an affiliate of Pebblebrook Hotel Trust in June for $89.5 million. SW Boston continues to market the condominiums.
Since filing for bankruptcy, the developer has paid down the loan balance to Prudential, its major creditor, $131.8 million, leaving a debt of $49 million. To date, 52 of the 123 condominiums have been sold. Another eight units are under agreement.
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