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Published: Friday, 6/28/2013

Spitzer auction placed on hold

Building’s Calif. owner files for bankruptcy protection

BY TYREL LINKHORN
BLADE BUSINESS WRITER
An auction for the 10-story Spitzer Building at 520 Madison Ave. has been delayed by a bankruptcy filing, but officials say the building will continue operating as it has been. An auction for the 10-story Spitzer Building at 520 Madison Ave. has been delayed by a bankruptcy filing, but officials say the building will continue operating as it has been.
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The final auction for downtown Toledo’s Spitzer Building — in foreclosure since last year — was put on hold Thursday because the building’s owner filed for bankruptcy protection.

Officials say the building will continue operating as it has been, but the delay is just the latest in a years-long legal battle surrounding the historic 10-story building at 520 Madison Ave.

“It is heartbreaking,” said Patrice Spitzer, the court-appointed receiver of the building. “This has been a labor of love and a sense of civic duty to keep this building open. It’s a difficult process. I have always had high hopes that we’d be able to do this, and there just seems to be roadblock after roadblock.”

Ms. Spitzer is the widow of Lyman Spitzer, the great-grandson of A.L. Spitzer, who built the structure with his cousin in 1896.

The building was purchased from the Spitzer family in 2009 by Ergur Private Equity Group, a California firm owned by Koray Ergur.

By January, 2011, the Spitzer Building Co., had filed a foreclosure action to reclaim the Spitzer Building as well as the neighboring Nicholas Building from the Ergur Group. Spitzer Building Co. was the first lien holder on both buildings.

The filing alleged that the note had been in default since Feb. 13, 2010. The building also had unpaid taxes, currently up to more than $339,000.

A Lucas County judge granted that foreclosure late last year, ordering the building to be sold at a Lucas County sheriff’s sale. The auction date in May was pushed back to June 13. No one bid at that auction.

The second, and final, sheriff’s auction was scheduled for Thursday. If no one placed a bid at the second auction, the property would have reverted to the Lucas County Land Reutilization Corporation, otherwise known as the County Land Bank.

But Mr. Ergur’s filing for Chapter 11 bankruptcy protection for the company that holds the building put an automatic stay on the sale.

Attorney Scott Ciolek, who represents the building’s court-appointed receiver, said the filing is another attempt by Mr. Ergur to delay the sale.

“Most likely we’ll get relief from the stay and be able to move forward with the foreclosure sale in a week or two,” Mr. Ciolek said.

Kara Bruce, a University of Toledo law professor not involved with the case, said a bankruptcy filing automatically puts on hold any debt collection proceedings, including foreclosure sales. However, there are several ways creditors can petition for the stay to be lifted.

Ergur Ergur
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She said there are provisions in the law designed to prevent someone from filing for bankruptcy and holding up the process indefinitely.

In the meantime, Mr. Ciolek said the building will stay open and continue to operate as it has been. That includes a temporary agreement the building had with the fire department over a fire-alarm system that is not up to code. Under that agreement, the building’s hours were scaled back and employees walk the building as fire lookouts while it is open.

“We’re just going to operate under those guidelines they gave us until we hear otherwise,” Mr. Ciolek said.

At last count, the building was occupied at 38 percent capacity. Ms. Spitzer said that will drop, as a group of eight lawyers is in the process of moving out of the building.

She wasn’t aware of any other tenants who were looking to leave.

“I think that many tenants have Plan B’s and they should, because we have no guarantees,” she said. “But as far as I know, the other tenants are for the time being staying put.”

Mr. Ciolek said Land Bank officials have committed to keeping the building open if they take control.

An auction for the neighboring Nicholas Building, at 608 Madison Ave., is scheduled for a sheriff’s sale July 11.

The 17-story Nicholas building, which was the downtown headquarters of Fifth Third Bank, was closed in September, 2009, because of unpaid utility bills. It was also owned by the Ergur Private Equity Group.

Mr. Ciolek said that auction is still on track to go forward because it was not listed as an asset in the bankruptcy filing.

He said there are interested bidders.

Contact Tyrel Linkhorn at tlinkhorn@theblade.com or 419-724-6134.



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