April 19 (Bloomberg) -- Liberty Harbor North Inc., a developer of waterfront property opposite Manhattan in Jersey City, New Jersey, filed for bankruptcy to resolve a $21 million court judgment related to the urban-renewal project.
Company President Peter Mocco, a former mayor of neighboring North Bergen, put three companies affiliated with the Liberty Harbor community into bankruptcy to settle a legal dispute with a former landowner.
“We need the quick definitive action of the bankruptcy court to permit me to enter into a settlement,” Mocco said today in an interview.
Liberty Harbor North controls land worth $350 million, the company said in court papers filed April 17 in U.S. Bankruptcy Court in Newark. The project itself is not in bankruptcy and has adequate cash flow, Mocco said.
The development is an example of “new urbanism,” which relies less on cars and more on public transportation in creating a sense of community, Bob Antonicello, executive director of the Jersey City Redevelopment Agency, said in a telephone interview.
It is monitored by more than 500 security cameras, served by two light-rail stations, and sits within walking distance of PATH trains run by the Port Authority of New York & New Jersey, Mocco said.
“People have really looked at this and said this could be a striking example of how to redevelop cities,” Antonicello said.
The bankruptcy filing is “very disappointing,” he said.
“When the developer files a bankruptcy and thinks it won’t impact the future development, that’s ludicrous,” he said. “At the end of the day, bankruptcies have a stigma. This will be a stigma on what has the potential for being a jewel on the Hudson. This cold, calculating business move could have a very damaging effect on the city.”
Mocco said Antonicello “doesn’t appreciate or have knowledge” of the need to settle the land dispute in bankruptcy.
“In order for me to do that, I have to take advantage of the tools the bankruptcy court has given to us,” he said.
The condominiums and town houses at Liberty Harbor sell for about $350,000 for a one-bedroom unit to $1.8 million for five bedrooms. About 650 of the units are occupied, and many of the residents work on Wall Street, Mocco said.
The finished project will have as many as 10,000 residential units spread over 80 acres, Mocco said.
The legal dispute involves a four-acre parcel of industrial land once owned by Ron, Lynn and Katherine Kerrigan, he said. The family sued the Jersey City Redevelopment Agency, which pursued an eminent-domain action on behalf of Mocco, Antonicello said.
A jury awarded them more than $18 million for the taking, a judgment upheld on appeal, Mocco said. With interest, their claim is now worth about $21 million, according to court papers filed with the bankruptcy court.
Mocco and his wife, Lorraine, signed a personal note and guarantee to the agency, Antonicello said. The agency is now pursuing a collection action against the Moccos in state court, according to Antonicello.
“This bankruptcy filing has nothing to do with the economic downturn and the recession,” Antonicello said. “This is more the result of a strategic bankruptcy where people have the resources but perhaps not the will to work through their difficult times.”
The Kerrigans and the Redevelopment Agency are listed as Liberty Harbor North’s biggest unsecured creditors. Liberty Harbor North owes creditors about $44 million, according to court papers.
The three companies that sought court protection each listed different debt figures. Some of the debt was jointly owed by at least two of the companies, including the Jersey City and Kerrigan liabilities.
The bankruptcy was first reported by the Jersey Journal newspaper.
The case is Liberty Harbor North, Inc. 12-19964, U.S. Bankruptcy Court, District of New Jersey (Newark).
To contact the editor responsible for this story: John Pickering at email@example.com.