Auraria Student Lofts receives approval of disclosure statement

By Sarah Lizee

Olympia, Wash., Aug. 11 – 5280 Auraria, LLC, which does business as Auraria Student Lofts, received approval of the disclosure statement for its amended Chapter 11 plan, according to an order filed Friday with the U.S. Bankruptcy Court for the District of Colorado.

The plan provides for the continued operations of its student housing business post-confirmation until a refinancing or a sale occurs of the principal asset of the debtor, the Auraria Student Lofts in Denver.

Once the debtor’s assets have been liquidated or the debtor has refinanced, the debtor will distribute the net proceeds to creditors.

Under the plan, administrative claims, tax claims and debtor-in-possession loan claims will be paid in full.

Class 1 consists of the asserted secured claims against the debtor held by SNR Contractors & Associates, RediCarpet, 14th Street General Improvement District (GID), DB Auraria and any other secured claims.

Each separate holder will be deemed its own class for purposes of voting on the plan.

Class 1.a claims consist of two mechanic’s liens, one held by SNR and the other held by RediCarpet. Class 1.a is impaired, and holders will be paid in full in the event of a refinancing, or retain their liens securing their claim to the same extent and with the same priority as their prepetition liens and will be paid from net sale proceeds under a waterfall recovery.

Each class 1.a claim will accrue interest from and after the effective date at the rate of 6% per annum.

The class 1.b claim consists of a statutory lien claim on all the assets of the debtor held by GID. The terms of treatment are the same as with class 1.a.

The class 1.c claim consists of the disputed secured claim of DB Auraria related to the asserted first-position mortgage on the real property. This class is impaired, and the amount of the claim will be $48.75 million. The holder will retain its lien securing its claim to the same extent and with the same priority as its prepetition lien to the extent that it is allowed. Any allowed claim above the secured claim will be treated as a general unsecured claim. On each month, from and after occurrence of the effective date, the reorganized debtor will pay interest at the rate of 6% per year.

The reorganized debtor will make interest payments to DB Auraria until maturity on Dec. 31, 2024.

DB Auraria will have consultation rights regarding the decision to sell the real property or refinance and the process for the sale, as applicable.

The class 1.d claims, which will consist of all other secured claims, if any, and will receive the same treatment as class 1.a and 1.b.

The company said the post-confirmation payments at the 6% interest rate are intended to compensate the holders of secured claims until a sale or refinancing event, with the rate being reflective of the low risk of inflation and nonpayment between confirmation and the payment deadline.

The debtor noted that it is DB Auraria’s position that an appropriate annual interest rate range would be in the range of 12% to 15%.

Class 2 priority security deposit claims will be paid in full.

Holders of class 3 other general unsecured claims will receive their pro rata share of net sale proceeds in line with the waterfall. If a sale doesn’t close and the debtor refinances, then it must pay allowed general unsecured claims in full by a payment deadline.

Holders of class 4 convenience claims will receive a cash payment in an amount equal to 80% of their claims.

Class 5 consists of the prepetition member interest of Nelson Partners, as the sole member and manager of the debtor. Class 5 is impaired, and, unless and until all allowed claims of a higher priority are paid in full, the holder will receive no payment. Otherwise, Nelson Partners will be paid the remaining net sale proceeds or funds from a refinancing event.

The San Clemente, Calif.-based company provides student housing in Denver. The company filed bankruptcy on June 9, 2022 under Chapter 11 case number 22-12059.

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