George Washington Bridge Bus Station Development files bankruptcy

By Caroline Salls

Pittsburgh, Oct. 8 – George Washington Bridge Bus Station Development Venture LLC filed Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the Southern District of New York with plans to market and sell its assets and business operations.

George Washington Bridge Bus Station Development Venture manager Bernard A. Katz said in a statement filed with the court that the company originally thought the bus station project would cost $183 million and take one year to complete, and it budgeted its costs and obtained financing for the project with the expectation that construction company Tutor Perini would finish the project on time.

However, Katz said “Tutor Perini caused the Project to be delayed years beyond the original anticipated dates of substantial completion.”

As a result of 30 months of delays by Tutor Perini, Katz said George Washington incurred millions of dollars of unanticipated costs for interest on loans and additional project carrying costs, including $1.7 million in delay charges that it was forced to pay the Port Authority for the failure to deliver the project on time and more than $11 million of interest during the delay period.

Katz said millions of dollars of rent receipts were lost as a result of the delays, and George Washington incurred more than $14 million of expenses while arbitrating its disputes with Tutor Perini. The manager said the company’s principals were forced to infuse an additional $5.5 million of new capital to cover arbitration expenses.

As a result of the delay, Katz said George Washington began to withhold progress payments, but Tutor Perini disputed its entitlement to do so.

Tutor Perini claims it is owed $130 million in damages. On June 4, an arbitration panel issued an interim order granting Tutor Perini’s request for an order of attachment in the amount of $23 million.

Arbitration order

On Oct. 3, the American Arbitration Association (AAA) issued an order that George Washington had “willfully violated” the interim attachment order, had transferred funds subject to the attachment order for the payment of personal expenses of one of its principals and for the payment of legal expenses and had wrongfully transferred net rental income received to its senior secured lender.

The AAA ordered the transfers to be returned to George Washington’s operating account by Nov. 1.

“Due to Tutor Perini’s efforts to deprive the debtor of its cash, the debtor faces the possibility that it will be unable to pay critical contractors and trade vendors who ensure that the retail space is maintained in safe working condition,” Katz said.

In addition, the manager said George Washington has been unable to satisfy its debt service obligations to the senior secured lender, and it defaulted on those obligations on April 10.

In light of the interim attachment order and pending foreclosure actions, Katz said the company has determined that, given its deteriorating liquidity position and pending arbitration with Tutor Perini, a sale of George Washington was the best available option to maximize value, and that “an in-court marketing process was the only reasonably executable structure through which a value-maximizing transaction could be completed.”

Katz said the company plans to conduct a marketing process of no more than 135 days to give interested parties a chance to bid for its assets and business operations.

DIP financing

In conjunction with the bankruptcy filing, George Washington obtained a commitment for $4.4 million in debtor-in-possession financing, with $1.23 million to be made available on an interim basis under an initial draw.

New York City Regional Center, LLC is the DIP financing lender.

The DIP facility will mature five months from the bankruptcy filing date and accrue interest at a rate of 10%.

Debt details

According to court documents, George Washington Bridge Bus Station Development has $50 million to $100 million in assets and $100 million to $500 million in debt.

The company’s largest unsecured creditors are Tutor Perini Building Corp. of Philadelphia, with a $23 million litigation claim; GSNMF Sub-CDE 12 LLC of New York, with a $14.07 million loan claim; and GWB Leverage Lender, LLC of Reston, Va., with a $9 million loan claim.

The company is represented in the Chapter 11 proceedings by Cole Schotz PC.

George Washington Bridge Bus Station Development Venture is a Reston, Va.-based development company. The Chapter 11 case number is 19-13196.

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