News

Freeborn & Peters' Partner Harley Goldstein Secures Approval of Designation Rights Deal on Behalf of Trustee in Polo Builders Bankruptcy

Firm named to sell Polo Builders assets
By Thomas A. Corfman

A bankruptcy court judge has appointed a real estate firm to sell off the bulk of the assets of Polo Builders Inc., a Villa Park developer that filed for bankruptcy earlier this year, leaving private investors holding the bag for more than $30 million in claims.

Polo's principal owner, Hasan Merchant, also filed for personal bankruptcy in June, when Polo and a related company filed their bankruptcy petitions.

"We are in favor of the trustee liquidating these assets for as much money as possible," said attorney Richard Fogel, who represents Merchant.

Melville, N.Y.-based DJM Asset Management LLC, which specializes in bankruptcy-related transactions, was appointed last week to market the properties, which include a stalled condominium conversion project overlooking Lincoln Park at 4180 N. Marine Drive.

But DJM has a tight time frame in which to strike a deal. And most of the properties are heavily burdened by bank loans and construction contractor claims that must be settled before investors see any money.

For example, bids for the 159 unsold units in the Marine Drive building are due Oct. 16, but the mortgage holder claims about $16.5 million. As a result, it is difficult to predict how much cash the sales may raise.

The hodge-podge of real estate interests includes a restaurant/banquet hall in Bensenville and a development site in Des Plaines.

In an unusual arrangement, DJM paid $175,000 for the right to market the assets. But the firm could potentially earn lucrative fees based on the success of the sales, 20 percent of the net proceeds above the total debt on a property. Ronald Douglas, managing director of DJM's local office, could not be reached for comment.

Many of Polo's investors were doctors and other professionals, said Harley Goldstein, partner in Chicago law firm Freeborn & Peters LLP, which represents the trustee overseeing the case. DJM's upfront payment will defray the cost of investigating whether claims exist against Merchant, he said.

The asset sales, approved last week, are part of a Chapter 7 liquidation of Merchant's two companies.

Polo has assets of $25 million and liabilities of nearly $32 million, while M.G. International LLC has assets of nearly $30 million and liabilities of more than $46 million, according to court documents. Some claims against the two companies could be duplicates. Merchant says his personal assets total $3.1 million.

Related Articles