This second bankruptcy filing also comes on the eve of a key event — an Oakland County Circuit Court judge’s hearing on whether to appoint a receiver, a renewed motion for which Southfield filed in December.
The property has been the site of a fire, various code violation citations and other issues that generally make the city consider it dangerous. The December motion for a receiver says more recent incidents at the property include someone throwing items from the building’s roof, damaging a vehicle. It says people continue to inhabit the property.
Robert Bassel, Shefa’s attorney, said the bankruptcy filing last week was a result not only of the impending hearing on a receivership but also whether his client wanted to continue spending money in a protracted legal battle that has been litigated in several courts over many years.
The result of the Chapter 11 case should be a sale of the property “for the most value” and also to “figure out who gets the proceeds,” Bassel said.
“It’s not to shed debt,” Bassel said, noting that Shefa is current on its property taxes and water and sewer bills.
“It’s basically the reality that this particular asset is worth more value to someone who has a clean slate with the city of Southfield than it does with the current owners. It’s business. Not much more to it. It should be sold for the most value. And the bankruptcy code determines who allocates the proceeds.”
Elhadad has attempted before to sell the property, enlisting the Southfield office of Colliers International Inc. to market it to potential buyers as a redevelopment play, as we reported in April.
One of the side issues has been how the redevelopment of the former Northland Center shopping mall site plays out and, now with construction underway on a large-scale effort to transform that massive site nearby, the former Plaza Hotel — formerly the Michigan Inn — becomes more valuable, even if it is in dire need of a massive overhaul.
The city has repeatedly sought a receiver for the property, which Elhadad bought in 2009 in foreclosure. It has said Elhadad has not met promises made in his previous bankruptcy settlement and that the property has fallen even further into disrepair in the years since, including in a 2019 fire. Several dozen code violations have been issued over the years, the city says.
In court filings, Elhadad has claimed that the city and Downtown Development Authority were embarking on a land grab and suggested that antisemitism was at play.
In bankruptcy court filings from last month, Shefa says it owes some $367,000 to Trantor Realty Inc. in Saint-Laurent, Quebec, plus unknown sums to the city and Oakland County, plus an attorney as well as building management company. A meeting of creditors is scheduled for March 7.
I emailed a Southfield spokesperson on Monday seeking comment.
The city has a first-position mortgage on the property, and Shefa was required to make $2.1 million in improvements, plus get site plan approval within six months of the February 2016 approval of the confirmation order. However, the site plan expired a year after it was approved and no building permits were issued, according to earlier court documents.
However, the city says Shefa — without getting permits — started internal demolition even though there is asbestos at the hotel. The 2019 fire was caused “by an intruder who gained access because the property had not been secured,” earlier court filings from the city say.
Some three dozen code violations have been issued at the property since 2013, the city says, including six after a district court consent order in January 2021 to board up broken windows and doors, keep the property free of debris and secure the property.
Shefa paid about $10.4 million for the hotel, which sits across from the former Northland Center mall that’s being redeveloped and next to Ascension Providence Hospital, in the November 2009 foreclosure auction, according to Southfield land records.
The hotel closed in 2010 when water and utility service was shut off due to nonpayment.
In the months prior to the sale, the outstanding water bill alone was north of $300,000, records show.
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