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FLORHAM PARK, NJ-A hearing has been scheduled for today in the US Bankruptcy Court in Newark regarding a debtor-in-possession filing by an affiliate of the Kushner Cos. for control of Tarragon Corp.

In a petition filed with the Bankruptcy Court last week, Westminster Residential Acquisition LLC, an affiliate of Kushner Cos., proposed a debtor-in-possession credit facility in the amount of $4.5 million to be forwarded to Tarragon. The financing will replace an earlier DIP from Arkomd LLC that was negotiated earlier this year when Tarragon filed for Chapter 11 bankruptcy. That existing DIP facility was $6.3 million.

If the deal were approved, it would mark a significant re-entry by Kushner into the apartment market. In 2007, the locally based company sold off 16,784 apartments in 86 complexes in four states to a joint venture of AIG and Morgan Properties. Last year, after the insurer nearly went into bankruptcy, many of those properties were put up for sale.

At time of its bankruptcy filing, Tarragon had unsecured debt totaling approximately $170 million. Also, its outstanding secured debt on debtor and non-debtor projects was approximately $165 million and $595 million, respectively. Its guaranteed obligations totaled some $769 million.

Upon the deal’s closing, Westminster will lend $11.8 million to Tarragon and make an equity investment of $250,000 in the reorganized company. A new seven-person board will have four members selected by the Kushner affiliate.

Tarragon portfolio’s includes luxury condo buildings in Edgewater, Palisades Park and Hoboken, including 1118 Adams. Kushner owns eight million square feet of office, industrial and retail space and more than 5,000 apartments in New York, New Jersey and Pennsylvania.

Calls to Tarragon, Kushner and the lawyer representing Tarragon in bankruptcy proceedings, Michael D. Sirota of Cole, Schotz, Meisel, Forman & Leonard PA in Hackensack, were not returned by deadline.

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