The rationale for selling the complex in two pieces stems from the fact that although it's generally thought of as a single property, Peter Cooper Village and Stuyvesant Town are actually two separate parcels: Block 972, Lot 1 and Block 978, Lot 1, respectively. Thursday's filing in US District Court in Manhattan proposes a "plan A" scenario under which the two parcels would be offered separately and a "plan B" scenario for selling them together.

Bidders could submit offers under both plan A and plan B, according to court documents. "The offers to purchase the property under plan A and plan B shall then be compared to each other," according to the motion. "Amongst those offers, the highest and best offer will be determined and announced."

BofA and CWCapital are seeking $3.7 billion in a sale: the amount of the defaulted mortgage plus interest, default interest, yield maintenance charges and other charges. However, the court has yet to determine the value of the property or the amount due to creditors; accordingly, the motion contains a request for Judge Alvin Hellerstein to do just that. In Thursday's filing, BofA and CWCapital recommend Judge Melanie Cyganowski, formerly a chief judge in US Bankruptcy Court, to serve as referee in a foreclosure sale.

It's not clear when such a sale would take place. Still to be resolved are issues stemming from last October's State Court of Appeals ruling that the complex's owners improperly deregulated apartment units while also receiving J-51 tax benefits. The ruling did not address how many tenants would have to be repaid and how much was owed them, nor how to calculate the payments.

There's also a motion filed by hedge fund Appaloosa Investment LP, which controls more than 25% of the senior debt on the complex, opposing a foreclosure sale. Appaloosa says it could be out more than $200 million if a sale takes place. Bloomberg News reported Friday that Hellerstein has yet to take action on the hedge fund's motion.

Stuy-Town's tenants, meanwhile, are gearing up to join in a bid for the property. They've retained law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP and financial advisory Moelis & Co., according to the Stuyvesant Town-Peter Cooper Village Tenants Association. To date, more than 50% of the tenants have signed "unity pledges" giving their support to such a bid.

However, any bid with the STPCVTA's participation isn't likely to come in under the "plan A" scenario described in Thursday's court filing. "We have always said that this is one single, united community and we hope that it will remain that way," City Council Member Daniel Garodnick told Bloomberg News. Garodnick is a lifelong resident of the complex.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.