NEW YORK CITY- A state Supreme Court judge has put a hold on thePeter Cooper Village/Stuyvesant Town foreclosure proceedingsscheduled for next Wednesday. The judge ordered Pershing SquareCapital and Winthrop Realty Trust, which planned to foreclose onthe property’s $300-million senior mezzanine debt, to appear incourt on Sept. 2.

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The move comes a day after CWCapital Asset Management, thespecial servicer on the $3-billion Stuy-Town first mortgage, fileda lawsuit to prevent the Pershing Square/Winthrop partnership fromforeclosing on the 11,227-unit property after acquiring the seniormezz debt for $45 million earlier this month.

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The order by Manhattan Supreme Court Justice Richard B. LoweIII, dated Thursday, requires the principals of PSW NYC LLC to showwhy CWCAM’s request for an injunction against foreclosing on themezz debt should not be granted. According to court records, theforeclosure on the first mortgage is tentatively set for the secondhalf of September.

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In a statement, CWCAM says the complaint “seeks to ensure thatcertain provisions and rights of the $3 billion first mortgagelender with regard to the mezzanine debt holders are enforced. Theorigination of the $3 billion loan was predicated on these rightsbeing in place and they were agreed to between the parties in theintercreditor agreement.” The special servicer adds that it hasspent the past nine months “engaged in detailed planning to ensurea smooth transition of this complex property that is home to 25,000New York City residents."

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Following Justice Lowe’s order, PSW released a statement of itsown, saying, “We remain confident in our right to acquire controlof the property owner while preserving the first mortgage lender'scollateral. The court took no adverse action today, notwithstandingCW Capital's mischaracterizations to the contrary. In light of thecourt's schedule, we have agreed to a short adjournment of ourforeclosure sale until resolution of CW Capital's pendingmotion.”

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.