Columbia businessman Alan Kahn will lose to foreclosure a portion of his 300-acre Village at Sandhill shopping complex in Northeast Richland, along with various other property holdings, in a settlement of a $100 million Chapter 11 bankruptcy filing.
The foreclosed properties at Village at Sandhill include three portions of the sprawling complex at the corner of Clemson and Two Notch roads – the Marketplace Phase II retail center, the VAS Condominiums and another undeveloped parcel. The Marketplace retail center holdings are on the west side of the 640,000-square-foot shopping complex and include the Super Bi-Lo and about 30 smaller shops. The undeveloped land sits behind that portion of the shopping center. And the condos are in various spots around a center fountain.
Another Columbia property formerly owned by Kahn – Dutch Plaza, an office building in St. Andrews – also is being foreclosed on in the massive bankruptcy deal. Two additional former Kahn properties caught up in the bankruptcy filing, a downtown Columbia warehouse and a residence in Isle of Palms near the S.C. coast, either have been sold already to help pay back the creditor, or will be sold soon, Kahn said.
All six of the properties were part of developer Kahn’s “Wells Fargo portfolio” – assets he used as collateral to borrow $64 million to keep his faltering real estate development empire afloat as the U.S. economy began crashing in 2007.
Kahn has developed numerous properties in Columbia and along the East Coast throughout the past five decades. The Village at Sandhill was his proudest achievement and was mid-development when the economy plunged into a deep and lasting recession.
As part of a controversial Chapter 11 bankruptcy plea Kahn filed in U.S. Bankruptcy Court in Columbia in April 2013, Kahn was ordered to repay less than 5 cents on the dollar to the more than 50 creditors he owed at least $100 million.
In sometimes testy negotiations between Kahn and his creditors, played out in court documents, Wells Fargo agreed to cap the repayment it can expect from Kahn on the $64 million debt he owed them at $15 million.
The bankruptcy court valued the Marketplace Phase II retail area at just over $2 million, and the condominiums were valued by the court at $15.8 million.
Efforts to obtain a response from Wells Fargo on the foreclosures and the bank’s future intent were unsuccessful by deadline Monday.
The bankruptcy court approved Kahn’s overall repayment plan in September and gave Kahn until Nov. 28 to either liquidate or refinance the Wells Fargo portfolio, or face foreclosure.
Kahn, 74, said Wells Fargo requested him to either liquidate their collateral properties or convey the properties back to them through a deed of foreclosure. “This appeared to be the best way to maximize their return,” Kahn said.
“This is simply another part of the process of working to provide a greater return for my creditors, which I have been doing for some time now.”
Kahn has contended throughout the bankruptcy process that he was working with his creditors to repay them his loans, but essentially was forced to file bankruptcy because one creditor – his biggest creditor in this case, Gibraltor BB4, LLC – took actions to obtain repayment that Kahn said jeopardized other creditors.
Kahn said the land area of the three parcels at Village at Sandhill to be received by Wells Fargo through foreclosure comprise less than 10 percent of the 300-acre overall land area of the shopping complex.
Kahn also said the foreclosures would be “seamless to the public” and not have any visible effect on the complex.
Kahn, who has a long and respected career in the Midlands as a developer and businessman, proposed a stark settlement to repay his creditors.
The bankruptcy filing covered Kahn and two companies he controls, Kahn Family and Kahn Properties South, both limited liability entities. Kahn, whose net worth was valued during the court proceedings at up to $10 million, fought to protect his personal assets in the case.
Kahn’s major creditor, Gibraltor, a Pennsylvania-based distressed real estate and investments company, and Wells Fargo, both opposed Kahn’s repayment plan and unsuccessfully asked the court to appoint a trustee to oversee Kahn’s business and assets during the bankruptcy process.
Kahn vigorously opposed the move, claiming the necessity of keeping his businesses operating as the best opportunity for creditors to recover assets.
The court did not appoint a trustee in the case.
Kahn and wife live in a rented apartment at his Village at Sandhill complex, court papers showed. But it was Kahn’s personal assets that seemed to be a draw for his creditors.
For instance, Kahn continued to foot the bill for the upkeep of a few homes, all of them listed in his wife’s name: one in Columbia on Lake Shore Drive and another on Isle of Palms near Charleston.
The 75-year-old Lake Shore Drive property has been in Kahn’s wife’s name for two years, court records showed, and was infested with mold, making it unlivable and unsellable.
The Isle of Palms house, which Kahn said will be sold in a few weeks, has been in Kahn’s wife’s name since 1995. Kahn also foots the bill for the upkeep of a $291,000 Paris apartment owned outright in his wife’s name for more than 13 years, records showed.