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Bronx-based affordable housing developer Valdesia Gardens Housing Development Fund Corp. filed for Chapter 11 bankruptcy in New York on Friday, citing $22.6 million in liabilities, including a $19 million claim from a primary lender and additional legal disputes tied to personal injury, labor laws, and foreclosure actions.

Debt and Creditor Details

Valdesia Gardens listed $22.4 million in secured debt backed by its property, which is valued at $15 million, and $168,638 in unsecured debt.

Key creditors include:

• Community Preservation Corp. (CPC): The nonprofit finance entity linked to a $19 million mortgage claim.
• Internal Revenue Service: $1.2 million owed.
• New York City Department of Housing Preservation and Development: $2 million owed.

The housing complex, located at 569-575 Prospect Ave. in the Bronx, is an affordable housing project that, once completed, will provide 44 units for residents earning up to 70%-90% of the area median income.

Refinancing and Restructuring Efforts

The debtor is seeking to refinance the CPC loan through the bankruptcy process to complete construction, which is reportedly 85% finished.

“The project needs to be completed not only to realize the maximum value of the property for all creditors, but also to provide a new living opportunity for that community in the Bronx,” said Jonathan S. Pasternak of Davidoff Hutcher & Citron LLP, counsel for Valdesia Gardens.

David Goldwasser of FIA Consultants has been brought on as chief restructuring officer, and the company is actively pursuing debtor-in-possession financing to stabilize operations and move forward with construction.

Legal Challenges

Valdesia Gardens faces significant legal liabilities, including:

• A lien from the Environmental Control Board of New York City.
• Seven lawsuits involving personal injury claims, labor law violations, a foreclosure action by CPC’s affiliate, and a mechanics’ lien.

The foreclosure action was initiated in 2022 and remains a major factor in the bankruptcy proceedings.

Court Oversight

The case has been assigned to U.S. Bankruptcy Judge Kyu Young Paek.

Representation

Valdesia Gardens is represented by Jonathan S. Pasternak of Davidoff Hutcher & Citron LLP.