Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Tuesday, July 28, 2009

Bankruptcy filing stymies foreclosure

By Andrew Gomes
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

The Waikiki high-rise Canterbury Place is embroiled in a bitter dispute between its developer and the building's association of owners.

NORMAN SHAPIRO | The Honolulu Advertiser

spacer spacer

A partnership that built Waikiki high-rise Canterbury Place has filed for bankruptcy, in a move that blocks an effort to foreclose on the developer's interest in the 32-year-old luxury tower.

The partnership headed by former Hawai'i developer Bruce Stark, 1910 Partners, filed for Chapter 11 protection on Friday.

Assets and debts were both listed in the range of $1 million to $10 million. More precise estimates weren't available, but are scheduled to be filed later.

The bankruptcy filing is the latest move in a bitter dispute between Stark, who relocated to Las Vegas about a decade ago, and Canterbury's association of apartment owners.

Stark's partnership, which built the 152-unit tower at 1910 Ala Moana in 1977, owns commercial space leased to Singha Thai Cuisine, Todai Restaurant Waikiki, an office tenant and an operator of 110 parking stalls.

In March, the building's association of owners sued to foreclose on the assets of 1910 Partners, alleging that Stark's company hasn't paid utility and maintenance fees since November, and that roughly $400,000 in unpaid fees to date has forced each residential unit owner to pay $350 a month to keep building operations solvent.

Stark claims that some of his tenants weren't able to pay him any or all rent because of the economic downturn, which led to his inability to pay for building expenses and a mortgage tied to the property.

Stark, in a May interview, also said he quit paying maintenance fees and utility charges because he believes the association for years has overcharged him for such expenses. The association disputes Stark's claim, and said he should seek arbitration to resolve such an issue.

As a result of the bankruptcy, the legal battle over the disputed fees will move from state Circuit Court to federal Bankruptcy Court. Also, the association will no longer be able to collect rent directly from Stark's tenants as it had been doing. Rent collections will revert to the partnership but under Bankruptcy Court supervision.

Another foreclosure suit, filed in April by Pacific Guardian Life Insurance Co., alleged that Stark defaulted on payments for a $3.5 million loan secured by the property. That suit has been settled, according to Chuck Choi, a local bankruptcy attorney representing 1910 Partners.

In the bankruptcy filing, 1910 partners said it owes about $800,000 in debts not secured by the property that were outstanding at the time of the Chapter 11 filing.

The largest so-called unsecured claim is held by Stark's former partner Robert Pulley, who co-developed Canterbury but was later bought out by Stark. Pulley is seeking to recover $578,000 that he paid Pacific Guardian to satisfy a personal loan guarantee he made through 1910 Partners, Choi said.

The next three biggest unsecured claims are $110,010 owed to the law firm McCorriston Miller Mukai MacKinnon, $58,795 in Honolulu real property taxes and $18,428 in state taxes.