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Hearing Date: August 1, 2013 at 9:45 a.m.
Objection Deadline: July 25, 2013 at 5:00 p.m.

ALSTON & BIRD LLP
Jason H. Watson
David A. Wender (pro hac vice)
One Atlantic Center
1201 West Peachtree Street
Atlanta, GA 30309-3424
(404) 881-7000

-and-

John P. Doherty
John W. Spears
90 Park Avenue
New York, New York 10016
(212) 210-9400

Counsel for the 172 Madison (NY) LLC

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------x
In re:
:
:
:
:
:
---------------------------------------------------------------x

NMP-GROUP, LLC,

Debtor.

Chapter 11

Case No. 13-12269-REG

NOTICE OF 172 MADISON (NY) LLC’S MOTION TO DETERMINE
THAT THE DEBTOR IS A SINGLE ASSET REAL ESTATE DEBTOR

PLEASE TAKE NOTICE, that a hearing will be held before the Honorable Robert

E. Gerber, United States Bankruptcy Judge, on August 1, 2013 at 9:45 a.m. Eastern Time

in Room 523 of the United States Bankruptcy Court for the Southern District of New York,

One Bowling Green, Alexander Hamilton Custom House, New York, New York 10004, or

soon thereafter as counsel can be heard, to consider 172 Madison (NY) LLC’s Motion to

Determine that the Debtor is a Single Asset Real Estate Debtor (the “Motion”).

PLEASE TAKE FURTHER NOTICE that any responses or objections to the relief

requested in the Motion shall: (a) be in writing; (b) conform to the Federal Rules of

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Bankruptcy Procedure (the “Bankruptcy Rules”), all General Orders, Local Bankruptcy

Rules; (c) be filed electronically with the Court, with a hard copy provided to the Clerk’s

Office at the Bankruptcy Court for delivery to the Chambers of the Honorable Robert E.

Gerber; and (d) be served so as to be actually received by July 25, 2013 at 5:00 p.m.

Eastern Time, by (i) Alston & Bird LLP, counsel for the 172 Madison (NY) LLC, 90 Park

Avenue, New York, New York 10016 (Attn: John P. Doherty, Esq. and John W. Spears,

Esq.) and Alston & Bird LLP, One Atlantic Center, 1201 West Peachtree Street, Atlanta,

Georgia, 30309 (Attn: Jason H. Watson and David A. Wender); (ii) Cole, Schotz, Meisel,

Forman &Leonard PA, counsel for the Debtors, 25 Main Street, Hackensack, New Jersey

07601, (Attn: Ilana Volkov Esq.); (iii) Silverman Acampora, LLP, counsel for Marianne T.

O’Toole, Trustee, 100 Jericho Quadrangle, Suite 300, Jericho, NY 11753 (Attn.: Jay S.

Hellman) and (iv) Office of the United States Trustee, 33 Whitehall Street, 21st Floor, New

York, New York 10004.

Date: July 15, 2013

ALSTON & BIRD LLP

By:

/s/ Jason H. Watson

Jason H. Watson
David A. Wender
One Atlantic Center
1201 West Peachtree Street
Atlanta, GA 30309-3424
(404) 881-7000

-and-

John P. Doherty
John W. Spears
90 Park Avenue
New York, New York 10016
(212) 210-9400

Counsel for the 172 Madison (NY) LLC

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ALSTON & BIRD LLP
Jason H. Watson
David A. Wender
One Atlantic Center
1201 West Peachtree Street
Atlanta, GA 30309-3424
(404) 881-7000

-and-

John P. Doherty
John W. Spears
90 Park Avenue
New York, New York 10016
(212) 210-9400

Counsel for 172 Madison (NY) LLC

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------x
:
In re:
:
:
:
:
---------------------------------------------------------------x

NMP-GROUP, LLC,

Debtor.

Chapter 11

Case No. 13-12269-REG

172 MADISON (NY) LLC’S MOTION TO DETERMINE THAT THE DEBTOR IS A

SINGLE ASSET REAL ESTATE DEBTOR

172 Madison (NY) LLC (“172 Madison”) hereby moves the Court to determine that

NMP-Group, LLC (“NMP” or the “Debtor”) is a “single asset real estate” (“SARE”) debtor

within the meaning of Section 101(51B) of Title 11 of the United States Code (the “Bankruptcy

Code”) for all purposes, including without limitation for the purposes of Section 362(d)(3) of the

Bankruptcy Code. In support of this motion, 172 Madison respectfully submits the following:

Background

1.

On or about November 6, 2007, UBS Real Estate Securities Inc. (“UBS”) entered

into a Loan Agreement (as amended, the “Loan Agreement”) with NMP. Pursuant to the Loan

Agreement, UBS loaned NMP twenty-nine million dollars ($29,000,000). This loan is evidenced

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by a Promissory Note (the “Note”) dated as of November 6, 2007. All of NMP’s obligations

under the Loan Agreement and the Note are secured by a Mortgage, Security Agreement,

Assignment of Rents and Fixture Filing (the “Mortgage”) dated as of November 6, 2007. The

Mortgage granted UBS a security interest in, among other things, the real property located at 21

East 33rd Street, 172 Madison Avenue, and 176 Madison Avenue, New York, New York (the

“Real Estate”) and all related estates, development rights, improvements, easements, equipment,

fixtures, personal property, leases, rents, and other rights (as more fully described in the

Mortgage).

In connection with the Loan Agreement, NMP also executed an Assignment of

Leases and Rents (the “Assignment”) on or about November 6, 2007. See Garrison Comm.

Funding IV REO LLC v. NMP-Group LLC, Index No. 650087/2010, pp. 1-3 (N.Y. Sup. Feb. 17,

2011) (“Judgment No. 1”).1

2.

On or about April 2, 2009, UBS assigned all of its rights under the Loan

Agreement,

the Note,

the Mortgage, and the Assignment

(collectively, with all

related

documents, the “Loan Documents”) to StabFund (USA) Inc. (“StabFund”). See id.

3.

The Note matured on November 9, 2009, and all of the outstanding principal and

interest under the Note became due and payable. NMP defaulted under the Loan Documents by

failing to pay all of the outstanding principal and interest due on that date.

4.

On or about February 5, 2010, StabFund filed a foreclosure complaint against

NMP and certain other defendants with the Supreme Court for New York County (the “State

Court”) in an action entitled Stabfund (USA) Inc. v. NMP-Group LLC, et al., Index No.

650087/2010 (N.Y. Sup.).

5.

On or about April 8, 2010, StabFund assigned all of its rights under the Loan

Documents to Garrison Commercial Funding IV REO LLC (“Garrison”).

1 A copy of Judgment No. 1 is submitted as Exhibit A.

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6.

On or about February 17, 2011, the State Court granted Garrison summary

judgment of foreclosure against NMP (see Judgment No. 1), and on September 23, 2011, the

State Court granted Garrison summary judgment of

foreclosure against

the remaining

defendants.2

7.

On or about August 17, 2011, Garrison assigned all of its rights under the Loan

Documents to 172 Madison.

8.

On June 7, 2013, the State Court issued a Judgment of Foreclosure and Sale (the

“Sale Judgment”) ordering, among other things, the sale of the Real Estate at a public auction.3

9.

The auction pursuant to the Sale Judgment was scheduled to be held on July 10,

2013.

10.

On July 10, 2013 (the “Petition Date”), NMP filed a voluntary petition for relief

under Chapter 11 of the Bankruptcy Code (the “Petition”). NMP failed to indicate that it is a

SARE debtor on its Petition.

11.

Along with its Petition, NMP filed the Declaration Pursuant to Local Rule 1007-

2 (Docket No. 2; the “Dubrovsky Declaration”). According to the Dubrovsky Declaration, “[t]he

Debtor was formed to acquire, own, improve, manage and operate the real property known as

172-179 Madison Avenue (a/k/a 21 East 33rd Street) New York, New York (the ‘Property’).”

(Dubrovsky Decl. ¶ 3.) The only asset held by NMP that is specifically identified in the

Dubrovsky Declaration is the Real Estate.4 (Id. ¶ 9.)

12.

13.

NMP has not yet filed its schedules or statement of financial affairs.

As of the Petition Date, the total amount owed to 172 Madison by the Debtor

2 A copy of this September 23rd summary judgment is submitted as Exhibit B.
3 A copy of the Sale Judgment is submitted as Exhibit C.
4 Unspecified “contingent, unliquidated claims for the recovery of money” are also listed as assets of NMP in
paragraph 9 of the Dubrovsky Declaration. However, no further information about these alleged claims has been
provided.

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under the Loan Documents was approximately $51,878,784.74, consisting of unpaid principal,

interest, default interest, taxes, attorneys’ fees, costs, expenses, and other amounts due and

payable pursuant to the terms of the Loan Documents.

Motion to Determine that the Debtor is a SARE Debtor

14.

The Bankruptcy Code defines SARE as follows:

real property constituting a single property or project, other than
residential real property with fewer than 4 residential units, which
generates substantially all of the gross income of a debtor who is
not a family farmer and on which no substantial business is being
conducted by a debtor other than the business of operating the real
property and activities incidental thereto.

11 U.S.C. § 101(51B).

15.

Thus, if the following three elements are met, a debtor will be considered a SARE

debtor: (1) the debtor owns a single parcel of real estate (other than a residential property

consisting of four or fewer residential units) (2) that generates substantially all of the debtor’s

income and (3) on which no substantial business is being conducted other than operating the

property and incidental activities. See id.; In re Village Walk, LLC, No. 07-32930 (LMW),

2008 WL 2477601, at *3 (Bankr. D. Conn. May 29, 2008); Kara Homes Inc. v. Nat’l City Bank

(In re Kara Homes, Inc.), 363 B.R. 399, 404 (Bankr. D.N.J. 2007).

16.

Each of these three elements is present here, and, thus, the Debtor should be

considered a SARE for all purposes.

17.

First, the Real Estate is composed of three adjoining parcels of real property and

is not a residential property consisting of four or fewer residential units. The property is

currently undeveloped, but it “is intended for the development of a mixed-use building for retail

and condominiums.” (Dubrovsky Decl. ¶ 3.) Although the Real Estate is technically composed

of three parcels, these three parcels will be united in a single project (i.e., “development of a

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mixed-use building”). In fact, in its Sale Judgment, the State Court decreed that the Real Estate

be sold “in one parcel.” (See Sale Judgment at 5.) This satisfies the first element of the SARE

test. See In re JJMM Int’l Corp., 467 B.R. 275, 278 (Bankr. E.D.N.Y. 2012) (holding that “the

question is whether the debtor treats its property as a single project or property by virtue of a

common plan or purpose”). Accordingly, the Real Estate is “a single property or project, other

than residential real property with fewer than 4 residential units” within the meaning of section

101(51B) of the Bankruptcy Code, and the first element of the SARE test is present here.

18.

Second, the Debtor does not appear to be generating any income at this time, and

the Real Estate is raw, undeveloped real property. This is sufficient to satisfy the requirement

that the Real Estate generate substantially all of the Debtor’s gross income. Cases considering

these circumstances nearly uniformly hold that a debtor who owns a single piece of raw land that

is not currently generating income can be a SARE debtor. See In re Village Walk, 2008 WL

2477601, at *3 n.8 (finding the second element satisfied and noting that “the Property generates

substantially all of the income of the Debtor (although at present, the Property generates no

income . . .).”); In re Pensignorkay, Inc., 204 B.R. 676, 682 (Bankr. E.D. Pa. 1997) (“[T]he fact

that the real property is currently undeveloped and not generating any income for the Debtor is of

little consequence for purposes of the inquiry here, since the Court is satisfied that Congress did

not intend to excuse from compliance with the revised statute the class of debtors who hold

undeveloped tracts of land for future development.”); In re Oceanside Mission Assocs., 192 B.R.

232, 236 (Bankr. S.D. Cal. 1996)

(concluding that “‘single asset

real estate’

includes

undeveloped real property which generates no income”); see also In re Golf Club Partners, L.P.,

No. 07-40096, 2007 WL 1176010, at *5 (E.D. Tex. Feb. 15, 2007) (finding that the debtor, an

operating golf course, was not a SARE debtor but noting that “it is irrelevant whether, prior to

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the Petition Date, the Debtor has had net income or losses . . .”); Hon. Roger M. Whelan &

William W. Senft, The Legislative Response to Single Asset Real Estate Bankruptcies: Critical

Analysis and Some Suggestions, 1 AM. BANKR. INST. L. REV. 157, 161 (1993) (“When the single

asset real estate is raw land, property with a vacant commercial development, or property on

which there is construction in progress, the debtor frequently lacks both the desire and ability to

pay interest. To be sure, the Debtor has no income. . . . Proposed section 362(d)(3) seeks to

ameliorate this situation by requiring the single asset real estate debtor to submit a reasonable

plan within ninety days, and conditioning further delay on the payment of interest.”). Thus, the

second element of the SARE test is satisfied here.

19.

Third and finally, the Debtor has no business apart from the Real Estate, and no

other business is currently operating at the Real Estate.

Indeed, “[t]he Debtor was formed to

acquire, own, improve, manage and operate the real property known as 172-179 Madison

Avenue (a/k/a 21 East 33rd Street) New York, New York (the ‘Property’),” i.e. the Real Estate.

(Dubrovsky Decl. ¶ 3.) Moreover, all of the unsecured creditors listed on the Debtor’s Petition

appear to be professionals or construction-related service providers. (See Petition at 4-5.) Thus,

the third element of the SARE test is present here.

20.

Since all three elements of the SARE test are present here, the Debtor is a SARE

debtor.

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WHEREFORE, 172 Madison respectfully requests that the Court (a) enter an order

substantially in the form submitted herewith as Exhibit D determining that the Debtor is a SARE

for all purposes and (b) grant such other relief as it deems warranted under the circumstances.

Date: July 15, 2013

ALSTON & BIRD LLP

/s/ Jason H. Watson

Jason H. Watson
David A. Wender
One Atlantic Center
1201 West Peachtree Street
Atlanta, GA 30309-3424
(404) 881-7000

-and-

John P. Doherty
John W. Spears
90 Park Avenue
New York, New York 10016
(212) 210-9400

Counsel for 172 Madison (NY) LLC

By:

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