Casco Seeks Bankruptcy for High-End Condo Project Gone Bad

Casco Development filed for bankruptcy on a $539 million luxury condo in Chelsea that never got off the ground.

The firm’s Noam Teltch signed the Chapter 11 filing as the company looks to sell the debt-ridden, vacant development site at 540 West 21st Street.

Secured and unsecured debt at the property totals $256.7 million, based on an analysis of the bankruptcy filing. Casco is controlled by a foreign real estate investor named Uri Chaitchik, Crain’s reported in 2014 when the firm bought the site from the Atlantic Foundation.

The foundation’s John Johnson, an heir to the Johnson & Johnson fortune, reportedly offered to return $2 million to the developers if their project achieved LEED certification.

PincusCo first reported the bankruptcy filing and Casco’s agreement to sell the property to 550W21 Owner LLC for an undisclosed price. The person or people behind the Delaware-based entity could not be determined. A sale would require approval by the court.

The largest unsecured creditors on the bankruptcy filing are the art dealer David Zwirner, who has a $28.75 million claim, and JLL broker Peter Riguardi, whose $958,000 claim is listed as disputed. Zwirner has a major presence in Chelsea.

Developers facing foreclosure often put projects into bankruptcy to pause the process, buying time to find new financing or a buyer. That is typically a tall order, and especially when interest rates are high and lending is tight, as they are now, and a project is already struggling.

Casco bought the property in January 2014 for $50 million and refinanced its debt with $50 million from Bank Hapoalim in 2018. The project, however, never got very far.

Plans filed in 2017 called for a 171,800-square-foot building with 34 units asking a combined $539 million. The apartments were to be marketed at $3.4 million to $58 million — ambitious pricing, although a 10,000-square-foot penthouse elsewhere in Chelsea did sell for $59 million to Robert Smith in 2018.

Permits were issued in 2019 but Casco never secured a construction loan for its development, which was to be 250 feet tall and 20 stories, with a 4,700-square-foot retail component and a 49,000-square-foot gallery.

Last May, an LLC called Ray New York, with SL Green Realty acting as servicer, purchased the original loan from Bank Hapoalim and agreed to lend the project another $80.5 million, according to PincusCo.

The parties involved declined to comment or could not be reached.