Hassen Sale Proceeds Top $44M
By Kelsey Butler
The Chapter 7 trustee for Hassen Imports Partnership has the green light to sell the debtor’s auto dealership property and adjacent land in deals for more than $44 million.Chapter 7 trustee Howard Ehrenberg of SulmeyerKupetz PC said at a Sept. 11 auction, winning bidder Dighton America Inc. agreed to acquire five commercial development properties from Hassen for $13.75 million. Dighton is an entity partially owned by Hassen principal Ziad Alhassen, Ehrenberg said.
Dighton America also agreed to acquire Hassen’s car dealership properties in West Covina, Calif., for about $30.86 million.
Ehrenberg said $44.61 million in sale proceeds will be handed over to the estate.
Nine other companies participated in the auction for the various properties, Ehrenberg said. Backup bidders for both the West Covina development properties and the dealership properties have dropped out, he said.
Judge Ernest M. Robles of the U.S. Bankruptcy Court for the Central District of California in Los Angeles approved the deals at a hearing on the day of the auction, Ehrenberg said.
“It was somewhat surprising to most that the principal of the debtor essentially bought back his own property,” Ehrenberg said. “But from a bankruptcy estate point of view and a creditor point of view, the sales were very successful.”
The sale of the nondealership properties will close five days after the entry of a sale order, while the sale of the dealership properties will close 30 days after the entry of an order, Ehrenberg said. Orders on the deals had not been submitted as of Monday, Sept. 16.
In an Aug. 21 motion, Ehrenberg requested Robles approve a sale of Hassen’s West Covina auto mall property to whichever company submitted the highest offer for the land. The trustee sought a minimum of $16.75 million for the auto mall and two lots. Because the auto mall is encumbered by liens of various lenders, the sale proceeds will be distributed to the lenders by the trustee.
Ehrenberg also sought a minimum of $7.75 million for a Chrysler dealership and $4.25 million for a Mazda dealership, both in West Covina.
Interested parties had until Sept. 9 to submit offers for the properties, court papers show. The dealerships and auto mall are part of the $30.86 million sale to Dighton.
Additionally, stalking-horse bidder City Ventures LLC had agreed to acquire Hassen’s nondealership properties in West Covina for a total of $10.75 million. The real estate includes a fabrication shop, storage lot and a gas station.
Competing bidders had to offer at least $11.29 million by a Sept. 9 bid deadline, court papers show.
CBRE Inc. has been shopping the dealership assets since February, while Jones Lang LaSalle has been marketing the nondealership assets.
Robles on Jan. 2 signed an order converting the real estate owner’s case from Chapter 11 to Chapter 7. The judge named Ehrenberg Chapter 7 trustee two days later.
In court papers filed Nov. 29, the city of West Covina, Calif., owed $7.59 million in secured debt, asserted the case should be converted as a $10 million sale of affiliated car dealerships meant to fund the debtor’s reorganization plan had fallen apart. Proposed purchaser YTransport LLC backed out of the deal on Nov. 14.
Ziad Alhassen also owns used car dealerships West Covina Ford Inc. and West Covina Motors Inc., located on the debtor’s property.
West Covina alleged that due to the collapse of the sale and proposed plan, the debtor had no way to successfully reorganize “within a reasonably foreseeable time frame.”
Hassen filed for bankruptcy on July 27, 2011, just ahead of a foreclosure sale of its 10 West Covina land parcels.
The city had on April 10, 2006, in state superior court filed a lawsuit against Hassen following what it termed “years of continuing defaults” under an existing loan agreement.
The superior court on June 8, 2012, entered a judgment for $7.59 million in favor of the city that allowed West Covina to foreclose on the dealerships to pay the debt.
Hassen in October 1999 had entered into a loan agreement with West Covina, under which the city gave the debtor millions of dollars in public funds in exchange for the company meeting certain development and operational commitments and repaying the debt.
In schedules, Hassen reported $9.24 million in assets and $37.56 million in liabilities.
Christine Pajak at Stutman, Treister & Glatt PC is debtor counsel. |
