October sale sought for beleaguered Harrisburg apartments

The bankrupt owners of an uptown Harrisburg apartment complex want to hire a firm that specializes in real estate liquidation to sell the property in an auction.

  • In a motion filed in bankruptcy court, apartment owners Uptown Partners LP are seeking court approval to hire Hilco Real Estate LLC to oversee a sale of the complex, known as Governor’s Square.
  • According to the proposed agreement, Hilco would market the property ahead of an auction with a bid deadline falling on or about Oct. 18.
  • “Debtor believes that the engagement of Hilco as a real estate broker … is in the best interests of its estate, and is necessary to its reorganization,” the filing says.
  • However, tenants in Governor’s Square have filed a motion in court to block the move.

Why: In their filing, the tenants argue that a quick sale “is likely to be detrimental to the interests of tenants.”

  • “It’s not that we’re opposing a sale in general,” said Marielle Macher, an attorney for the property’s tenants and executive director of the Community Justice Project, part of the Pennsylvania Legal Aid Network. “But we want the potential buyers to be vetted and not for it just to sold to the highest bidder at an auction.”
  • Robert Chernicoff, an attorney for apartment owners Uptown Partners LP, said debtors in a bankruptcy are generally allowed to hire the professionals they believe necessary.
  • Courts are concerned with what is in the best interest of all creditors and the suitability of a potential buyer is “not relevant to the hiring of a broker,” said Chernicoff, of Harrisburg-based law firm Cunningham, Chernicoff & Warshawsky.
  • Matthew Maisel, a Harrisburg city spokesperson, declined to comment on the latest filings. The city is listed as a creditor of Uptown Partners.
  • But in a previous statement, he said: “The person or company which eventually buys Governor’s Square may not be the highest bidder; it will be the offer best equipped to handle the task of providing quality, affordable housing, which is one of Mayor [Wanda] Williams’ top initiatives. Considering we have a final say in where this property goes, we will exercise that right we have to find the most qualified offer. But make no mistake, since we are not a commercial entity, the City of Harrisburg will not be making a profit off the sale of Governor’s Square.”

Where is this happening: The Governor’s Square apartments offer more than 200 units of affordable housing in uptown Harrisburg.

  • However, the property is half vacant and has drawn numerous citations from the city for health and safety violations.
  • One estimate gives the cost of fully renovating, upgrading and repairing the complex at more than $22 million, according to court records.
  • Maryland-based Uptown Partners filed for Chapter 7 bankruptcy protection in May but has been seeking to convert to a Chapter 11 bankruptcy, which would give it more time to sell the apartment complex.
  • The move to Chapter 11 has been supported by creditors.

What’s next: A hearing Sept. 12 on the switch to Chapter 11.

  • That will be followed next week by a hearing on the request to hire Hilco, which is based outside Chicago.
  • The case is playing out before U.S. Bankruptcy Court for the Middle District of Pennsylvania.


Gladly Sponsored By:

More Central PA News

Regional fireworks retailer sold

One of Pennsylvania’s most illuminating companies is under new ownership. The seller: Keystone Fireworks has stores in Altoona, Bradford, Gettysburg, Greencastle, Lancaster, Matamoras, Nottingham, Wilkes-Barre

Read More »