The owner of the Lipstick Building, the midtown Manhattan tower where Bernard L. Madoff ran the biggest Ponzi scheme in U.S. history, filed for bankruptcy.
Metropolitan 885 Third Avenue Leasehold LLC's petition for Chapter 11 bankruptcy Tuesday listed as much as $500 million of debts and assets. In June, Royal Bank of Canada sued to force a sale of the building, because the landlord had defaulted on a $210 million loan.
RBC was listed as the largest unsecured creditor, with a claim to $80 million. The skyscraper has 34 floors and was designed by John Burgee Architects with Philip Johnson. It gets its name from its elliptical shape and the red granite on its exterior.
Jacob Abikzer, a managing member of Metropolitan Real Estate Investors LLC, an affiliate of the debtor, said in court documents that the company has started negotiations with RBC for a plan of reorganization. "The recent violent downturn in the building and real estate markets have had a significant impact on the debtor's operations," Abikzer said, adding that increasing vacancy rates and lease renewals led to a serious liquidity issue.
As part of the restructuring plan, an entity named "New Lipstick" will pledge its ownership stake to RBC, according to Abikzer's statement.