Bankruptcy thwarts foreclosure auction of downtown Meriden buildings

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MERIDEN — A foreclosure auction to sell two downtown buildings was stopped Saturday when the property owner filed an eleventh hour bankruptcy appeal.

According to city records, CBD & Sons LTD of Brooklyn, New York is the owner of 9-11 Colony St. and 13-17 Colony St. More than $100,000 in taxes, water and sewer payments, blight liens and legal fees are owed on the buildings and they were the subject of a court-ordered foreclosure auction on Saturday.

However, three days before the auction, an entity named CBD Colony Street LLC filed for Chapter 11 protection in the Southern District of New York’s bankruptcy court, and stopped the auction from going forward. 

Chapter 11 allows debtors protection against creditors to reorganize or liquidate according to a court-approved plan. Unless a trustee is appointed, the debtor will remain in possession of the property.

“A last minute bankruptcy filing was introduced that stopped the sale,” said City Manager Timothy Coon. “The city is continuing to pursue all legal means to bring this property to auction.”

According to the foreclosure court records, CBD & Sons owes $30,400 in taxes and water and sewer bills on both buildings and $61,195 in blight liens to the city. Legal and appraisal fees could bring the total over $100,000. 

New York attorney Julie Cvek Curley who filed the bankruptcy petition on behalf of CBD, said the entity gained possession of the property through a foreclosure and never intended to renovate or develop it. CBD now wants to find a buyer for the buildings, she said Thursday. 

The properties have been vacant for about 20 years and Saturday’s sale was the second action brought by the city that was thwarted at the last minute. In 2017, former owner Paul Edwards received payment from CBD to settle the tax bills on the property just before a scheduled sale. Several months later, CBD took possession of the buildings from Edwards, who sued CBD.

The buildings have fallen into disrepair and city officials have had little contact with the owners. In 2019, it imposed a $100 a day blight lien after city workers were forced to shore up the buildings and put a fence around one of them to protect pedestrians from falling stucco on the sidewalks below.

An appraiser hired for the foreclosure valued 9-11 Colony St. at $182,500 and 13-17 Colony St. at $125,000.

“The building didn’t appear to be rentable at this time with several notices from the city Building Department about falling damaged loose stucco from the front of the building, sagging and failing roof structure due to removal of load bearing walls and landscaping issues causing icing conditions in the winter months,” Anthony John DeLucco wrote about 13-17 Colony St. “This appraiser didn’t gain access to the interior of the building, however the ground floor units were clearly visible from the public sidewalk, showing major repairs required.”

DeLucco rated the exterior in overall fair/poor condition.

The state Department of Economic and Community Development had a $50,000 mortgage agreement with Edwards and both parties were listed as defendants in the foreclosure. Edwards was eventually taken off the suit and the DECD asked the court to avoid a strict foreclosure because the city stood to make a profit between the appraised values of more than $300,000 on both buildings and the amount of taxes owed. The state argued it would not recover its money through a strict foreclosure by the city.

A Superior Court judge agreed in March and ruled for a foreclosure sale. During the 18-month proceeding CBD, never filed an appearance. Curley, who filed the bankrupty petition on CBD’s behalf, could not say why the partnership didn’t state its intentions before the foreclosure ruling. 

The bankruptcy filing and auction delay frustrated local officials who have been trying to pump activity into vacant buildings downtown. The hope was a new owner or investor would make repairs or sign a tenant.

“A number of people wanted to bid on it,” said City Councilor Michael Rohde. “And they declared bankruptcy at the last second and put a halt to the proceedings. They had plenty of time to do something and pay the taxes.”

The city intends to improve the facade and make improvements to the buildings, said Rohde, who chairs the City Council’s Economic Development, Housing and Zoning Committee.

Ross Gulino, who sits on the Planning Commission, owns the building next door and like other downtown landlords, is looking for tenants. Gulino believes the city should improve the buildings and get rid of the fence. It also needs to offer more incentives to attract qualified investors.

“Something’s got to happen,” Gulino said. “It’s like nobody cares. One person can’t pull the downtown together.”

Bankruptcy officials have scheduled a conference call in June, according to court records. 

mgodin@record-journal.com203-317-2255Twitter: @Cconnbiz

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