Information for Creditors of Kenwood Commons, LLC
Case Number 22-35169 in the United States Bankruptcy Court for the Southern District of New York
THE KENWOOD COMMONS VISION
Kenwood Commons, LLC was founded on a vision of creating a modern urban community on 75 acres in Albany, New York. At the time of the bankruptcy filing in late March 2022, the community had five existing structures with over 240,000 square feet that were under construction and destined to become condominiums. Ultimately, the community planned to feature over 2,500 residential units, 600 hotel rooms, and an additional over 400,000 square feet of “ancillary spaces,” according to filing in the bankruptcy case.
In the ancillary spaces, Kenwood Commons planned to feature an Arts & Cultural Center that would offer classes, lectures, exhibitions, and concerts, as well as a spa and club for members. Ultimately, the Debtor hoped to create a community focused on art, culture, and wellness. The project is being managed by Jacob Frydman, an emerging real estate developer in New York.
THE MORTGAGE HAS BEEN FORECLOSED
Despite its lofty vision, the Debtor ran into significant trouble with its primary secured lender, TBG Funding. While Kenwood Commons worked to construct its planned community, it needed to borrow funds while not bringing in any revenues. It was able to secure over $5 million in funding from TBG but fell behind on payments. Recently, TBG was able to get permission from a New York court to foreclose on its mortgage. A foreclosure sale of the Kenwood Commons property was scheduled. Due to the bankruptcy filing, the foreclosure sale is on hold.
In the bankruptcy case, Kenwood Commons hopes to preserve its vision by either refinancing the debt it owes to TBG or selling its property through the case. Typically, sales of property through bankruptcy cases are able to raise more money than foreclosure sales. So, even if Kenwood ends up being sold, the Debtor hopes it will sell for more money than it would have outside of the bankruptcy case.
THE OUTCOME FOR CREDITORS IS UNCERTAIN
In its initial bankruptcy filings, Kenwood Commons did not indicate why it was forced to bankruptcy, other than explaining that its secured lender had foreclosed. However, due to market conditions and recent bankruptcy filings, we can assume that the project likely suffered from both construction delays and skyrocketing material and shipping costs due to the rippling effects of COVID-19. These market forces likely combined to cause Kenwood to miss payments on its secured debt, which in turn likely led to the foreclosure.
At this point, the Debtor has valued its assets at $103 million and its liabilities at $14 million. Such a disparity in assets and liabilities is typically good news for creditors. However, the Debtor’s valuation of its assets is suspect. So, time will have to tell how creditors will fare in this case. If you are interested in getting involved or just discussing the implications of the Kenwood Commons bankruptcy case, please contact PRLT for a free consultation.
PRLT does not represent Kenwood Commons, LLC. The content on this page is provided for informational purposes only. Nothing on this page or this website creates an attorney/client relationship between you and PRLT. Nothing on this page is legal advice. If you have any questions about the Kenwood Commons bankruptcy case or anything discussed on this page, please contact us.