NEW YORK CITY-Lawyers for both senior lenders and mezzanine debtholders on Peter Cooper Village and Stuyvesant Town argued theirpositions before a Manhattan state Supreme Court judge Thursday,but left the courthouse without a decision one way or the other.Justice Richard B. Lowe III said he would rule later this month,according to published reports, on whether a joint venture ofPershing Square Capital Management and Winthrop Realty Trust may goahead with its plan to foreclose on the 11,227-unit apartmentcomplex on the basis of controlling $300 million of mezz debt.

The JV, PSW NYC LLC, bought the mezz debt last month for $45million, or 15 cents on the dollar, and planned an August 25foreclosure auction. That plan ran afoul of the senior mortgageholders, who had foreclosure plans of their own after the complex’sownership defaulted on the $3-billion mortgage at the beginning ofthis year. CWCapital, which represented the lenders, filed suit toblock PSW’s sale.

Bloomberg reported on the courtroom exchange of arguments beforeLowe. “It’s all about a race to foreclose on the collateral,”Edward Weisfelner, a Brown Rudnick partner representing PSW,reportedly told the judge. “If they foreclose before I foreclose,then I’m gone, out of the money, kicked to the curb.”

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and 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.