Decision Delayed on Stuy-Town Foreclosure

NEW YORK CITY-Lawyers for both senior lenders and mezzanine debt holders on Peter Cooper Village and Stuyvesant Town argued their positions before a Manhattan state Supreme Court judge Thursday, but left the courthouse without a decision one way or the other. Justice Richard B. Lowe III said he would rule later this month, according to published reports, on whether a joint venture of Pershing Square Capital Management and Winthrop Realty Trust may go ahead with its plan to foreclose on the 11,227-unit apartment complex on the basis of controlling $300 million of mezz debt.

The JV, PSW NYC LLC, bought the mezz debt last month for $45 million, or 15 cents on the dollar, and planned an August 25 foreclosure auction. That plan ran afoul of the senior mortgage holders, who had foreclosure plans of their own after the complex’s ownership defaulted on the $3-billion mortgage at the beginning of this year. CWCapital, which represented the lenders, filed suit to block PSW’s sale.