The process to sell a historic Manhattan property that houses an off-Broadway theater venue should be overseen by an independent bankruptcy trustee instead of its owner, a judge ruled, WSJ Pro Bankruptcy reported. The property owner, 78-80 St. Marks Place LLC, sought chapter 11 protection from creditors in December, before the expiration of a forbearance agreement on a defaulted loan. Last month, mortgage lender Maverick Real Estate Partners LLC alleged mismanagement and self-dealing at the property, which also houses a tavern and a gangster museum, and asked that an independent trustee be named to oversee its financial restructuring. Bankruptcy Judge Martin Glenn yesterday rejected a request by property lawyer Andrew Gottesman that the business be allowed to run its own sale process, as is common in reorganizations, with help from a real-estate broker. Judge Glenn ordered that a chapter 11 trustee be named. Lawrence Otway, the owner of 78-80 St. Marks Place LLC, who oversees the businesses of Theatre 80, William Barnacle Tavern and the Museum of the American Gangster, told the court Tuesday that private property shouldn’t be seized without “just compensation.” “I beg the court not to destroy” decades of work and endanger his ability to support his family, Mr. Otway said. A “predatory” company shouldn’t be able to make a “predatory” profit during the COVID-19 pandemic, in the process depriving the community of a cultural resource, he said. The property has struggled since COVID-19, with its 2020 gross revenue falling to roughly $106,000 amid pandemic restrictions, court records show, down from about $800,000 a year before the pandemic. The property owner said it failed to refinance its mortgage loan ahead of a debt maturity due in December 2020.
