With an announcement that an unnamed investor may purchase a $93.9 million loan on the EpiCentre, a group of about 40 contractors and others who say they are owed more nearly $10 million is wondering what the news means for them.
EpiCentre says it owes the group, including contractors who built the complex and storeowners who say they are owed reimbursements for improvements made to their stores, more than $9 million.
According to a federal bankruptcy court motion the EpiCentre’s owners filed Friday, Birmingham, Ala.-based Regions Bank has found a buyer for the note.
But Dennis O’Dea, an attorney representing creditors in the case, said the announcement that an investor could buy the note does not necessarily mean there is funding to pay his clients. Still, it brings hope to the project, he said.
“I think whoever the new investor is does not have the same history of conflict,” O’Dea said, referring to the acrimony between EpiCentre and Regions. “There is an opportunity now for a forward-looking approach that could result in the company coming out of bankruptcy and returning the EpiCentre to a viable project.”
Regions loaned $90 million to EpiCentre owners Pacific Avenue and Pacific Avenue II to build the complex in uptown Charlotte.
The EpiCentre features 300,000 square feet of office and retail space at Trade and College streets. It sits at the site of the old Charlotte Convention Center and is considered an important part of the redevelopment plan for uptown.
Regions began foreclosure proceedings against the EpiCentre in July after claiming the owners had not paid on the loan since December. The foreclosure proceedings were halted when the Pacific Avenue companies filed for Chapter 11 bankruptcy protection that same month.
With an investor expressing interest in purchasing the note from Regions, EpiCentre owners are asking the court to approve a settlement that would drop all litigation between it and the bank.
EpiCentre, developed by Afshin Ghazi and George Cornelson, said in the court filing Friday that the new creditor would make a reorganization of the company successful.
O’Dea said his role is not to decide which general creditors get paid, but to construct a plan so that they can be paid.
“Since real estate projects are really valued by the rental income they generate, whoever is going to invest will want to see the project generating revenue by producing rents and having happy tenants,” he said.
Steel Specialty of Belmont, N.C., is owed $156,511, according to a list of creditors holding the 20 largest unsecured claims, but majority owner Farrell Mauldin said the actual amount owed was originally $264,000.
“We agreed to take $197,000, not because we did anything wrong but because it was better than nothing,” Mauldin said about an agreement between Ghazi and Steel Specialty. “We reached an agreement of $40,000 paid upfront and so much more per month.”
Although Mauldin is happy with the way Atlanta-based Fulcrum Construction, through which Mauldin’s company was subcontracted, has handled repaying his company, he is not happy with Ghazi.
“Ghazi in my opinion was a little arrogant about the whole thing,” he said. “The first time I talked to him on the phone about this situation, he explained to me that ‘This is like a game to me.’ And I made the statement to him, ‘This is no game to me.’ He basically beat all the subcontractors down. He got the building built and did a shakedown on the contractors.”
Mauldin says Ghazi was holding money owed to contractors at the end of the construction project.
“He was going to everybody and tried to cut the prices down,” Mauldin said. “To go from $263,000 to an agreement for $197,000, well that’s $67,000 he just saved. Save $20,000 from another and $100,000 from another, and on down the line, you would probably come up to a few million dollars. There’s people in the Raleigh state prison for robbery for 20 years, and the system tells us what Ghazi has done is good business.”
Ghazi could not be reached for comment.
Mauldin said he will never work on another project with Ghazi.
Tara Ramsey can be reached at [email protected].