Uri Mermelstein’s Top Rock Holdings appears to be making a last-ditch attempt to maintain control of its Midtown office-to-resi project.
An entity tied to the office portion of 609 Fifth Avenue filed for Chapter 11 bankruptcy protection in federal court in Manhattan on Wednesday, one day before a scheduled UCC foreclosure auction on the equity interests in the office portion of the property. A bankruptcy halts a foreclosure.
The identity of the mezzanine lender and the amount of the mezzanine debt are not known. The developer owes $71.8 million in senior debt, according to the UCC sale notice, which was first reported by PincusCo, along with the Chapter 11 filing.
“When a process turns value-destructive, Chapter 11 gives the borrower the ability to reset and drive toward the highest-value outcome for its lender, lien holders, and investors,” said Leo Jacobs, an attorney representing Top Rock in the bankruptcy. “Reposition, restructure, reset.”
Valley National Bank provided an $80 million acquisition loan in 2022 when Top Rock, along with its partner RJ Capital Holdings, bought the former WeWork space in 2022 for $100 million from SL Green.
The developer reportedly planned to build luxury residential condos. In 2023, RJ Capital filed plans to convert the 14-story commercial into a 29-story mixed-use property with 76 residential units that would double the height of the building to 400 feet.
The office portion of the building has been sitting empty since WeWork vacated its lease in 2021. The building’s retail space, owned by the Reuben Brothers, was anchored by Puma’s flagship store. In February, Puma was forced to shut down the shop until further notice because of water damage in the building caused by a burst pipe, WWD reported.
Reuben Brothers sued the upstairs landlord and RJ Capital’s Michael Abramov on March 2, alleging he breached his fiduciary duties by failing to pay roughly $468,000 in steam charges owed to Con Edison. The unpaid bills led to a building-wide steam shutoff and caused the pipes to freeze and burst, the suit alleges.
The bankruptcy filing estimates assets between $50 million and $100 million and liabilities between $10 million and $50 million.
Mermelstein and Abramov could not immediately be reached for comment. A broker for the mezzanine lender, GW Assets FZE, declined to comment.
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Former Fifth Ave WeWork slated for resi conversion
Top Rock revealed as buyer of former Fifth Ave WeWork for $100M
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