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The reorganization plan has been filed. But the civil war among creditors of the failed office building at 1585 Broadway continues, in one of New York's most acrimonious and closely watched real estate bankruptcies.
At the heart of the battle is the unusual dual role Swiss Bank Corp. played in the financing of the 1.3-million-square-foot tower between 47th and 48th streets. Swiss Bank was the lead agent in a senior debt consortium, which now is owed $357.5 million, and it also made a subordinated loan to the project, worth $58.4 million.
"It created an inherent conflict of interest," says one attorney involved in the bankruptcy.
Attorney Alan J. Pomerantz, a spokesman for the bank group, declined comment except to say, "This was a complex deal and most of the issues have been resolved." Swiss Bank has denied the conflict of interest charge.
Still, the perceived conflict has hampered creditor negotiations over a reorganization plan proposed by David Solomon, 1585 Broadway's developer. Lenders agree on the plan's outline, under which the senior lenders would become 1585 Broadway's owners, but they disagree on key points.
Banks are in accord that the two unsecured lenders, European American Bank and Commercial Bank of Kuwait, should get a total of $2.5 million for their $100 million in claims, and that Mr. Solomon should get a $1.7 million consulting fee.
But court papers and interviews with participants reveal sharp disagreements remaining among the lead banks --Swiss Bank, Toronto-Dominion Bank and Bank of Montreal--and the other members of the senior debt syndicate, Hokkaido Takushoku Bank Ltd., Banque Nationale de Paris, Istituto Bancario San Paolo di Torino,...