Court orders examiner appointment for Madison 92nd Street Associates

By Caroline Salls

Pittsburgh, Sept. 14 - An examiner will be appointed in Madison 92nd Street Associates, LLC's Chapter 11 bankruptcy case, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, Madison 92nd Street Associates co-managing member Robert Gladstone and three of its members asked the court to dismiss the company's Chapter 11 bankruptcy case or appoint a Chapter 11 trustee or examiner to oversee the bankruptcy proceedings.

According to the motion, co-managing members 92nd St. Hotel Associates LLC, which is controlled by Louis Taic, and JKNY, LLC, which is owned by Jeffrey Kosow, filed the bankruptcy case without corporate authority in direct contravention of the provisions of the debtor's operating agreement.

The movants said these co-managing members knowingly violated the operating agreement because Hotel Associates reneged on its commitment to sign a fully negotiated $86 million stalking horse sale contract under which creditors would have been paid in full and equity would have received a significant return.

Gladstone and the three members said Hotel Associates reneged in an attempt to squeeze them to sell their membership interests at a steep discount.

In addition, the movants said the co-managing members secretly signed a financing term sheet that attempts to remove them entirely from ownership of Madison 92nd Street's sole asset and wanted to complete an illegal hostile takeover of the company.

According to Wednesday's order, the parties all consented to appointment of an examiner on Tuesday in furtherance of an overall settlement.

The examiner will investigate the best reorganization strategy for the company, with a recommendation as to whether Madison 92nd's refinancing, sale or some other option is in the overall best interests of the company, its estate, its creditors and its equity holders.

The examiner will also investigate the company's retention of professionals, with a recommendation regarding the disinterestedness of Goldberg Weprin Finkel Goldstein LLP and Olshan Grundman Frome Rosenzweig & Wolosky.

The examiner's report is due in 45 days.

Madison 92nd Street is a New York-based hotel owner. The company filed for bankruptcy on Aug. 16, and the Chapter 11 case number is 11-13917.

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