Meriden officials want bankruptcy investigation that thwarted foreclosure auction

MERIDEN – The city is asking a bankruptcy court to allow it to investigate the 11th hour formation of a limited liability partnership that ended a planned foreclosure auction of two Colony Street buildings.

A bankruptcy lawyer hired by the city called the move a deliberate attempt to “derail” the auction and asked a federal bankruptcy court in New York to allow it to conduct a 2004 rule review. , reviewing several claims made by CBD & Sons LTD and CBD Colony Street. LLC.

City officials have said their goal is to move forward with the auction to get 9-11 Colony St. and 13-17 Colony St. into the hands of a viable owner. The properties were the subject of an 18-month foreclosure action in New Haven Superior Court and the sale was ordered for May 22. But a bankruptcy filing filed by CBD Colony Street LLC the day before stopped the auction.

If the city’s request is successful, attorneys would be allowed to file a trustee for CBD & Sons LTD and review documents surrounding the formation of CBD Colony Street LLC. The investigation aims to investigate, among other things, the trustee’s allegations that the foreclosure sale violates bankruptcy court proceedings.

Irve J. Goldman of Pullman & Comley LLC in Bridgeport questioned this claim and others after it was revealed that the new entity had not been formed when the deeds were transferred to CBD Colony Street LLC on May 21st.

“In a discredited and abusive move which has been described as the ‘new debtor syndrome’ … this debtor was newly formed on May 24, 2021 and is said to have acquired the Colony Street properties on the basis of a waiver deed. CBD dated May 21 December 2021, three days before the formation of the debtor, “Goldman argued in court documents.” Although the debtor filed its petition on the same date as the date of the waiver deed, the debtor had no legal existence at that time and it is not known how or when, if any, the deed of renunciation was delivered to the debtor.

Goldman argued that the two entities share the same ownership and the same controlling person, Aaron Twersky, a director of both entities. Twersky executed the resignation request for CBD as vice president and the petition for the debtor as a proxy for managing member Chana Daskal.

Daskal is from Brooklyn, New York, who received a net settlement of $ 20 million as a result of injuries she sustained in a helicopter crash in 2001. Twersky is the attorney for a fund in trust established for her and her two sons in 2007. A former trustee paid a loan of $ 750,000 from the trust to mortgage the two Meriden buildings, and Twersky later guaranteed the deeds when the previous owner defaulted on the loan, according to several lawsuits in three states.

Goldman argued that the city’s demand for a 2004 rule is justified because CBD had not yet formed the single-asset entity but lobbied the city to stop the auction, according to legal documents.

Goldman said: “In furtherance of this scheme, the debtor’s attorney sent a threat letter to the town’s foreclosure attorney on May 21, 2021, which claimed that the ‘debtor is the beneficial owner of the “Colony Street properties” and was seeking automatic stay to derail their foreclosure sale scheduled for May 22, 2021 under threat of sanctions. “

Twersky’s letter to city officials stated, “The request is hereby made to comply with § 362 of the Bankruptcy Code and to cancel the foreclosure auction of the property. Any action taken in violation of Article 362 of the Bankruptcy Code is punishable by sanctions and will be brought to the attention of the court, ”according to legal documents.

Neither Twersky nor Goldman could be reached for comment.

Out of prudence and not having had time to consider the validity and legitimacy of the debtor’s actions and claims, the city rescinded the foreclosure sale, Goldman said.

“There are certainly good reasons for the examinations requested and the production of documents requested here,” argued Goldman. “The circumstances surrounding the formation of the debtor and the alleged transfer of the Colony Street properties by CBD, which has joint ownership with the debtor, as well as the same controlling person, Aaron Twersky, with the apparent aim of derailing the sale of Long-anticipated foreclosure of Colony Street properties certainly merits investigation by the secured creditor whose rights have been infringed.

The delay in the auction has frustrated city officials who see buildings as essential parts of downtown’s economic recovery and want the properties to be in the hands of an owner who will revitalize them. CBD had accumulated nearly $ 100,000 in rusting and property maintenance liens prior to the court-ordered foreclosure auction. The state’s Department of Economic and Community Development is also listed as a creditor of a mortgage it granted to the previous owner.

“It is high time to cut the cord here and go to a sale,” said city councilor Michael Rohde. “They’ve had a lot of time to sort out the finances overall.”

A conference call between creditors and the court is scheduled for Thursday.

mgodin@record-journal.com

203-317-2255

Twitter: @Cconnbiz

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