After being faced with the loss of their project to a foreclosure action, the developers of the Artecity condos in South Beach filed for bankruptcy. On Tuesday, the seven entities related to the project made filings in bankruptcy court. The liabilities ranged from $10 million to $50 million.
The filings, by Corus Construction Venture a partnership between the FDIC and Starwood, were made in an effort to stop the foreclosure lawsuit filed in March. Artecity condos in South Beach were intended as a 202 unit project, divided between new a building and a renovation of the Governor Hotel. There were 41 out of the 60 units sold but just one since the beginning of 2009. Work was halted months on the other 113 condos and 18 townhomes that were under construction
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A letter of default was sent to Artecity Holding in 2008 from Corus Bank after construction stalled for several months on the South Beach condos. A loan extension was then secured from the bank by Artecity’s lead manager Alessandro Ferretti and work restarted after raising capital from investors. However, he couldn’t see it through to completion.
David Philips, a Miami Beach attorney, who has represented dozens of buyers trying to get deposits back from Artecity. He also said that the investors who helped resume construction on the Miami Beach real estate property several years ago made a huge mistake and that they should have known the building wouldn’t generate the sales needed to repay its debt.
The company filed Chapter 11 to ask the court for permission to use $2.7 million in construction financing from its principals to complete the project, a spokesperson for Artecity said. The FDIC/Starwood joint venture didn't approve of this plan.
There were major unsecured creditors with loans to the developer as well as international investors from countries such as Italy and Panama and dozens of construction vendors, architects and law firms are also named as creditors.
No reorganization plan has been filed.
Contributed by MLR Realty
