Alston & Bird client Lazarus 5 LLC, a secured lender in the Chapter 11 bankruptcy of debtor 305 East 61st Street Group LLC, announced today that it had closed on the court-approved purchase of the debtor’s building and property at 305 East 61st Street, NY, NY, for approximately $50 million.
In August, upon a motion prosecuted by Lazarus 5, Judge Sean H. Lane of the U.S. Bankruptcy Court for the Southern District of New York entered an order that allowed the sale to proceed to Lazarus 5 free and clear of all existing legal, equitable, and possessory interests and claims of all parties and entities, including an alleged “sublease” held by the Aqua Ancien Bath company that had been the subject of years of litigation before the debtor’s bankruptcy filing.
Judge Lane’s decision was particularly instructive because he rejected the spa’s argument that sections 363(e) and 365(h) of the Bankruptcy Code provided it with continued possessory rights even in the context of a “free and clear” sale under section 363(f) of the Bankruptcy Code. The court’s ruling is one of only a few known reported decisions that has squarely addressed this issue in the context of a subtenant and free and clear sales under the Bankruptcy Code.
Representing Lazarus 5 in the matter are partners Gerard Catalanello and Jim Vincequerra, associate Geoffrey Williams, and paralegal Leslie Salcedo (Financial Restructuring & Reorganization); partner Stephen Cerniglia (Commercial Real Estate Lending); partner James Sullivan (Corporate & Business Transactions); and partner Katrina Llanes, senior associate Anna French, and associate William Lee (Finance).