Five-Year Saga Over Ill-Fated Amazon Development Site Ends Successfully for Client Quadrum Development

The five-year battle over ownership of the former Paragon Paint Factory in Long Island City concluded favorably for Morrison Cohen client Quadrum Development. Quadrum took ownership of the property, a heavily contaminated postindustrial site that was slated to become part of an Amazon development, after filing a successful creditor plan of reorganization. The final decree in the Vernon 4540 Realty LLC bankruptcy case was entered by the Bankruptcy Court in White Plains.

The case involved thorough analysis concerning New York State’s Brownfield Cleanup Program, which provides significant tax refunds to private-sector applicants who clean up and redevelop contaminated sites. Arguments focused on who was entitled to receive the approximately $2 million in Brownfield tax remediation credit – an issue that had been discussed only tangentially in prior bankruptcy cases.

Ultimately, Quadrum prevailed over a claim by the Debtor’s owner when Judge Robert Drain held that the tax credits were property of the Debtor’s estate. Quadrum also prevailed on its motion to have an Examiner appointed to seek recovery of the tax credits for the benefit of the estate.

The Debtor’s principal filed several motions and appeals over the course of five years in state court and in the bankruptcy case, all of which were unsuccessful, and was ultimately held in contempt of court and sanctioned for failure to comply with Court orders.

Quadrum was awarded a substantial contribution administrative claim of almost $900,000. Its contributions to the case included proposal and confirmation of the Plan, litigation resulting in appointment of the Examiner and recovery of the $1.9 million in Brownfield Tax Credits, as well as elimination of Debtor’s principal’s $1.5 million claim.

Quadrum was represented by Joseph T. Moldovan and David J. Kozlowski in the bankruptcy; Edward P. Gilbert in the Brownfield Tax litigation; and Latisha V. Thompson in the state court litigation and arbitration.