PWM Property Management files bankruptcy with over $1 billion in debt

By Sarah Lizee

Olympia, Wash., Nov. 1 – PWM Property Management LLC and its affiliates that directly or indirectly own 245 Park Avenue in New York City and 181 West Madison Avenue in Chicago have started voluntary reorganization cases under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware, according to a press release issued Monday.

PWM said in court documents that the properties have been impacted by the Covid-19 pandemic. In addition, those effects have been exacerbated by the record of poor performance by 245 Park Avenue’s conflicted property manager, SL Green Management Corp., which hasn’t attracted any new tenants, including any replacement for long-term anchor tenant, Major League Baseball, the company said.

The company said SLG’s failure to secure a replacement tenant for MLB precipitated the commencement of the cases because the absence of a suitable replacement tenant will permit the property’s mortgage loan special servicer to exercise cash dominion over all of 245 Park Avenue’s bank accounts following a tenant trigger event, which was set to occur on Monday.

“Cash dominion would cripple the debtors’ ability to operate in the ordinary course and put 245 Park Avenue at risk of a hasty forced sale controlled by the debtors’ pre-petition lenders,” the company said.

The company said it plans to use its reorganization to maximize stakeholder value by, among other things, restructuring its preferred equity and funded debt obligations to better position the company to capture market share during the anticipated post-Covid commercial real estate rebound.

During its restructuring process, the company will use its cash on hand to continue operating in the ordinary course, including paying go-forward property management fees and other operating costs without interruption.

PWM said it will seek to transition management of 245 Park Avenue to MB Real Estate, which manages the company's 181 West Madison property.

“The expansion of the company's relationship with MBRE as property manager of 245 Park Avenue will position the properties to enhance competition with their peer group by better aligning the property manager's incentives with those of the company and its stakeholders,” the company said in the release.

The company is seeking authorization to use the cash collateral of its pre-petition secured parties.

White & Case LLP is serving as the company's legal counsel, and M3 Advisory Partners LP is serving as restructuring adviser. Mohsin Meghji of M3 Advisory Partners is serving as the company's chief restructuring officer.

The company listed $1 billion to $10 billion in both estimated assets and estimated liabilities.

Its largest unsecured creditors are the Cook County Treasurer, based in Chicago, with a $13.43 million property taxes claim, and the New York City Department of Finance, based in New York, with a $9.76 million property taxes claim.

New York-based PWM is a property management company. It filed Chapter 11 bankruptcy under case number 21-11445.

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