Morrison Cohen Confirms Joint Plan of Reorganization Including Sale of Two Chinatown Mixed-Use Buildings

Earlier this month, the U.S. Bankruptcy Court for the Southern District of New York confirmed a plan of reorganization in the jointly-administered Chapter 11 cases of 26 Bowery LLC and 2 Bowery Holding LLC. The plan was co-sponsored by the debtors and the senior prepetition and DIP lender, Double Bowery Funding LLC, a Morrison Cohen client.

The bankruptcy cases commenced in March of 2022 when the senior lender and related mezzanine financing lender called a default under the prepetition loans. The mezzanine lender subsequently exercised pledges of 100% of the membership interests in each debtor and appointed an independent manager who ultimately placed the entities in Chapter 11 to maximize their value through sales of their primary assets—two parcels of real property in New York City’s Chinatown.

The plan is the culmination of two-and-a-half years of work, during which the debtors (with the lenders’ support) removed multiple non-paying insider tenants, while simultaneously maintaining the buildings and marketing them for sale. The two properties were sold pursuant to the plan, providing a good result—a recovery for the lenders and a carve-out of sale proceeds for the unsecured creditors.

Joseph T. Moldovan and David J. Kozlowski represented Bowery Mezz LLC, the prepetition mezzanine lender, and Double Bowery Funding LLC, the pre- and post-petition lender and plan co-sponsor. The cases are jointly-administered under 26 Bowery LLC, et al., Bankr. S.D.N.Y. 22-10412 (MG). The confirmation order can be found at docket entry 506.