919 Prospect Transcript of Hearing - January 25, 2017

16-13569-scc Doc 52 Filed 03/16/17 Entered 03/16/17 12:43:16 Main Document
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1 UNITED STATES BANKRUPTCY COURT
2 SOUTHERN DISTRICT OF NEW YORK
3 Case No. 16-13569-scc
4 Adv. Case No. 17-01009-scc
5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
6 In the Matter of:
8 919 PROSPECT AVE LLC,
9 Debtor.
10 - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
11 RODRIGUEZ et al.,
12 Plaintiff,
13 v.
14 919 PROSPECT AVE.,
15 Defendants.
16 - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
17
18 U.S. Bankruptcy Court
19 One Bowling Green
20 New York, NY 10004
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22 January 25, 2017
23 1:02 PM
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25
Veritext Legal Solutions

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1 B E F O R E :
2 HON SHELLEY C. CHAPMAN
3 U.S. BANKRUPTCY JUDGE
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1 Hearing re: 16-13569-scc Doc #20 Order to Show Cause
2 Shortening Notice and Scheduling Hearing to Consider the
3 Tenant-Petitioners Emergency Motion for an Order (I)
4 Granting Relief from the Automatic Stay and (II) Dismissing
5 the Chapter 11 Case and Imposing Sanctions.
7 Hearing re: 16-13569-scc Order to Show Cause
9 Hearing re: 17-01009-scc Doc #5 Order to Show Cause
10 Shortening Notice and Scheduling Hearing to Consider the
11 Tenant-Petitioners’ Emergency Motion for Abstention and
12 Remand.
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25 Transcribed by: Sonya Ledanski Hyde

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1 A P P E A R A N C E S :
3 ROSEN, KANTROW & DILLON, PLLC
4 Attorney for the Debtor
5 38 New Street
6 Huntington, NY 11743
8 BY: AVRUM J. ROSEN
10 STROOCK & STROOCK & LAVAN LLP
11 Attorney for the Movants / Tenants
12 180 Maiden Lane
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15 BY: KENNETH PASQUALE
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17 UNITED STATES DEPARTMENT OF JUSTICE
18 Attorney for the U.S. Trustee
19 201 Varick Street, Room 1006
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22 BY: ANDREA B. SCHWARTZ
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1 NYC DEPARTMENT OF HOUSING PRESERVATION & DEVELOPMENT
2 Managing Attorney
3 100 Gold Street, Room 6-02
6 BY: JEMMA AN
7 GDORIDA CACUCI
9 URBAN JUSTICE CENTER
10 Staff Attorney
11 123 William Street, 16th Floor
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14 BY: STEPHANIE RUDOLPH
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1 P R O C E E D I N G S
2 THE COURT: Thank you, please have a seat. Could
3 I have appearances, please?
4 MR. PASQUALE: Good afternoon, Your Honor.
5 Kenneth Pasquale from Stroock & Stroock & Lavan for the
6 tenant movants. With me is my co-counsel, Stephanie
7 Rudolph, from the Urban Justice Center. You've granted her
8 pro hac application.
9 THE COURT: Very good. Ms. Cacuci, how are you?
10 MS. CACUCI: Good. How are you, Judge?
11 THE COURT: Okay.
12 MS. CACUCI: And with me is Ms. An from HPD, an
13 attorney.
14 THE COURT: Okay. Very good. Mr. Rosen, how are
15 you?
16 MR. ROSEN: Good afternoon, Your Honor. Avrum
17 Rosen of the firm of Rosen, Kantrow & Dillon representing
18 the Debtor.
19 THE COURT: Okay. Ms. Schwartz, good afternoon.
20 MS. SCHWARTZ: Good afternoon, Your Honor. Andrea
21 Schwartz for the United States Trustee.
22 THE COURT: All right, very good. All right.
23 I've received a lot of papers in the last several days,
24 including last evening -- I don't know at what time it was
25 filed, but Ms. Cacuci filed a response to the Debtor's

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1 opposition. And so you can safely assume that I have
2 everything and that I've read everything, but I'm going to
3 look to you folks to tell me the order in which you'd like
4 to discuss the various matters that are before me.
5 MS. CACUCI: If I may be heard just for a minute,
6 Your Honor, it seems the Debtor has admitted that HPD can
7 proceed with its action. I'm going to let Mr. Pasquale take
8 a look --
9 THE COURT: Okay. Let me confirm that with Mr.
10 Rosen. Mr. Rosen, the Debtor does not object and agrees
11 that the exercise of the police power exception to the
12 automatic stay is in play here and that HPD can proceed.
13 MR. ROSEN: Correct, Your Honor. They can and we
14 would like them to.
15 THE COURT: Okay.
16 MR. ROSEN: We're prepared for that.
17 THE COURT: All right. Very good.
18 MR. PASQUALE: Thank you, Your Honor. Again,
19 Kenneth Pasquale from Stroock & Stroock & Lavan for the
20 movants. (COUGHS) Excuse me. Your Honor, thank you first
21 for expediting --
22 THE COURT: Sure.
23 MR. PASQUALE: -- the hearing today.
24 THE COURT: Just let me say --
25 MR. PASQUALE: Yes.

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1 THE COURT: Just let me say something about that
2 because in reading everything, I think we have to address a
3 concern that it was very expedited and due process rights
4 are, of course, important.
5 One of the reasons it was expedited was because
6 there were allegations made with respect to certain
7 emergency conditions that were in existence at the building,
8 so that was point number one.
9 And point number two, was the reality of my
10 schedule, which is -- and I'll just put it out there because
11 it is what it is -- I’m starting a two-month trial on Monday
12 and, you know, to the extent that we don't finish today and
13 we have to schedule things to resume at some point, we're
14 going to have to work around that and we will work around
15 it.
16 But there was -- it was important to me that we at
17 least get started today. So if anyone has anything to say
18 about the shortened time periods, I'm happy to hear them
19 later.
20 MR. ROSEN: Your Honor --
21 THE COURT: Mr. Rosen.
22 MR. ROSEN: -- the only thing I'd add to that is
23 in terms of the shortened time periods and I think you
24 understand the thrust to my argument in my papers, but I'll
25 wait for that. One of the things I realized when I went

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1 through -- also because it is expedited, there's also a
2 problem that I don't think there was -- I don't think not --
3 not only was it short notice and I want to put it out there
4 now, so Mr. Pasquale can address it, but the way it was
5 presented to you, I don't think you knew there were other
6 tenants who were not represented by them, that there were
7 other creditors, and that there was a bank -- there was the
8 first mortgagee. None of those people have notice of any of
9 these proceedings; they got nothing. They weren't included
10 in the order to show cause; they weren't set forth in the
11 papers as parties so you didn't know that. So in terms of a
12 motion to dismiss, motion to lift stay, I don't think you've
13 got --
14 THE COURT: Well you just -- you grouped together
15 a motion to dismiss and a motion to lift stay. Those are
16 two different things.
17 MR. ROSEN: Right.
18 MR. PASQUALE: Your Honor, and as I said --
19 THE COURT: So we have to walk before we can run.
21 MR. ROSEN: Okay. I just -- while we're talking
22 about the --
23 THE COURT: Sure.
24 MR. ROSEN: -- process issues, I just wanted that
25 --

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1 THE COURT: Right.
2 MR. ROSEN: -- to be out there.
3 THE COURT: But you should --
4 MR. ROSEN: I hadn't even really --
5 THE COURT: -- understand that based on the
6 bankruptcy pleadings that have been filed with me, it's
7 entirely unclear exactly who the Creditors are.
8 MR. PASQUALE: And that's the point, Your Honor,
9 and we made that point in our motion papers.
10 MR. ROSEN: Well there’s now -- there’s a matrix
11 that’s been updated, Your Honor.
12 THE COURT: Okay, he --
13 MR. ROSEN: I'll sit down.
14 THE COURT: Mr. Rosen, you know very well what the
15 rules of the road are. Okay, Mr. Pasquale's at the podium,
16 he's going to speak, you're going to have an opportunity.
17 MR. ROSEN: Thank you.
18 THE COURT: Okay? Go ahead.
19 MR. PASQUALE: Thank you, Your Honor. Your Honor,
20 just mentioning the urgency of the matter and I appreciate
21 the Court's schedule. The one thing I'd add with respect to
22 the timing that's very important and drives really all the
23 relief that the tenants have requested, is the fact that the
24 Housing Court is prepared to start trial tomorrow.
25 THE COURT: Yes, I was going to get to that.

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1 MR. PASQUALE: So that was the urgency, you know,
2 tied to the very significant dangerous conditions in the
3 units in the building. It's important to note, Your Honor,
4 that the Housing Court trial, the Article 7A trial, concerns
5 hundreds of violations against the building. It was 327
6 violations at the time of the petition; it's now 342
7 violations, a hundred and four of which are called class C
8 violations which represent immediately hazardous conditions.
9 So this is significant.
10 Part of the relief being requested by the tenants
11 in the Article 7A proceeding is for the appointment of an
12 administrator under that local law. And I think it's clear,
13 and we'll get to this as I get into the merits of the
14 particular claims for relief, that's what the landlord
15 doesn't want to happen and they say so in their papers.
16 So, Your Honor, unless the Court has a preference,
17 I think I'd like to start with the remand motion because
18 right now the entire Housing Court case is before Your
19 Honor.
20 THE COURT: Right.
21 MR. PASQUALE: So I'd like to start with that. I
22 think that'll be short, talk a bit about the lift stay and
23 then if the Court prefers, I can talk about the bad faith.
24 THE COURT: Well, the remand doesn't do you any
25 good without the lift stay.

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1 MR. PASQUALE: Well, it does and it doesn't, so --
2 THE COURT: Okay.
3 MR. PASQUALE: -- obviously, we can't proceed with
4 the case if it's not in Housing Court. We can proceed with
5 the case tomorrow against everybody except the Debtor, if it
6 is remanded. There are many other defendants in the --
7 THE COURT: I see your point.
8 MR. PASQUALE: -- case, including Mr. Miller,
9 individually, who is the managing member of the Debtor. So
10 the case can continue tomorrow.
11 Of course, that then leads to one of the key
12 issues on the lift stay which is, how efficient would that
13 be to proceed with a state law local real estate-related
14 issue in the Housing Court against all the other parties.
15 And then at some point, in light of Your Honor's schedule
16 according to what the Debtor has requested, we try the rest
17 of the Housing Court case before you?
18 THE COURT: Well, yeah. I mean I have a lot of
19 questions about all of that and we're going to get to them.
20 One thing I'd like you to do with whatever commentary Ms.
21 Cacuci and you, Mr. Rosen, want to supply is, you need to
22 help me understand beyond what I've read in the papers
23 because it doesn't necessarily all agree; is the implication
24 of the appointment of a 7A Administrator, and what that
25 means in terms of the current control of the building,

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1 future control of the building, and what the implications
2 also are for the mechanics of providing the funding for the
3 repairs that are required for the building.
4 MR. PASQUALE: Okay.
5 THE COURT: There seems to be an area of lack of
6 disagreement between the parties that repairs are ongoing
7 and are necessary, and that requires money. And I couldn't
8 tell if the suggestion was being made by the Debtor that in
9 the event of the appointment of the 7A Administrator that
10 funding source is gone -- is necessarily gone, either by
11 operation of law or because the Debtor's principal will
12 simply refuse to provide the funding. So there's that whole
13 constellation that we need to talk about, but we also need
14 to talk about, what are we doing here?
15 MR. PASQUALE: Yes, well --
16 THE COURT: Why is this case here?
18 THE COURT: And I'm just very aware -- I'm very
19 focused on doing things in the right order.
20 MR. PASQUALE: Right. So, as you're --
21 THE COURT: So --
22 MR. PASQUALE: Thank you, Your Honor.
23 THE COURT: Okay.
24 MR. PASQUALE: So, as you know, I'm the bankruptcy
25 attorney.

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1 THE COURT: Yes.
2 MR. PASQUALE: So I'm going to address the second
3 of those two, and I'm -- when I finish, Ms. Rudolph will
4 address your questions --
5 THE COURT: Okay.
6 MR. PASQUALE: -- on the housing proceeding, the
7 Article 7A Administrator and the like.
8 THE COURT: Okay.
9 MR. PASQUALE: So let's start just with one
10 overall thing and then, as I said, I'll talk about the
11 remand. The papers that we submitted, the exhibits -- both
12 Ms. Rudolph's declaration itself and the exhibits - there
13 was a comment made that these are just mere allegations,
14 there's no evidence in the record. That is not true. Ms.
15 Rudolph's declaration talks about her own personal knowledge
16 as to the proceeding in the Housing Court action, and most
17 importantly, Your Honor, the petition that's annexed, that's
18 Exhibit A, the Housing Court petition is verified by the
19 tenants under oath. So there was sworn testimony in the
20 record. Okay?
21 THE COURT: Let me ask you to pause. Are we -- do
22 you believe that we're having an evidentiary hearing?
23 MR. PASQUALE: No, Your Honor --
24 THE COURT: Okay.
25 MR. PASQUALE: -- but I did want to state your

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1 purposes --
2 THE COURT: All right.
3 MR. PASQUALE: -- of the motion.
4 THE COURT: So we're not having an evidentiary
5 hearing today.
6 MR. PASQUALE: Correct, Your Honor.
7 THE COURT: Right, Mr. Rosen?
8 MR. ROSEN: Your Honor, my understanding is when
9 matters are first on any hearing in this day, it's not on
10 for an evidentiary hearing.
12 MR. ROSEN: If you're asking me if I think we need
13 one, I think the answer's yes, but we're not.
14 THE COURT: Well, we'll get to that.
15 MR. ROSEN: Okay.
16 THE COURT: But right now --
17 MR. PASQUALE: All I'm --
18 THE COURT: Yeah.
19 MR. PASQUALE: Yes, Your Honor --
20 THE COURT: Yes.
21 MR. PASQUALE: -- I understand that, of course.
22 THE COURT: Yes.
23 MR. PASQUALE: I'm just making the point that the
24 declarations are sworn like they should be. This is not
25 just allegations thrown in and a complaint that's not

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1 verified.
2 THE COURT: Okay.
3 MR. PASQUALE: On the motion to remand, Your
4 Honor, frankly, the Debtor concedes that remand is
5 appropriate. If you look at their opposition, they don't
6 even discuss the standard for mandatory abstention under 28
7 U.S.C. 1334(c)(2). Instead, they make an argument that the
8 Court has related to jurisdiction, which I conceded in our
9 motion. That's not the issue. So the -- I think it's
10 conceded, but I will go through the factors because I think
11 it's important.
12 First, the motion to abstain is timely; filed it
13 within 10 days of the removal. Second, the Housing Court
14 proceeding that was removed, it's now the adversary
15 proceeding before Your Honor, is based solely upon state
16 law. It's solely Article 7A of the New York Real Property
17 Actions and Proceedings Law.
18 The Housing Court proceeding is not a court
19 proceeding. The Debtors, again, do not argue with this --
20 although they did in their notice of removal, they've
21 abandoned that argument. So if it's related to, doesn't
22 work for mandatory abstention purposes.
23 The only basis for removal was the bankruptcy
24 jurisdiction from a result of the filing of the petition.
25 The Housing Court proceeding will be timely adjudicated in

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1 state court. I wish we could get a judgment tomorrow, but
2 the trial can start tomorrow and so it certainly will be
3 timely adjudicated.
4 So, Your Honor, it's pretty simple. Mandatory
5 abstention, all the factors have met, and the Housing Court
6 action should be remanded. Permissive abstention also would
7 apply, but Your Honor doesn't need to go there.
8 Now, upon remand, Your Honor, if your -- Court
9 were to agree with me, as I mentioned earlier, the Housing
10 Court case would start tomorrow. It would not start against
11 the Debtor unless the stay is lifted. And I do think, Your
12 Honor, although agreed -- not an evidentiary hearing today,
13 you don't need one on the lift stay motion.
14 We go through all the details in our papers as to
15 the (indiscernible) factors; let me just hit a few. The
16 balance of the harm weighs overwhelmingly in favor of the
17 tenants. We already talked about the conditions they face
18 in the building; illegal construction, release of toxic dust
19 during construction, removal of bathrooms, children bathing
20 in sinks, exposure to lead paint, infestation. These are
21 all the things, plus more, alleged in the proceeding that
22 will be tried tomorrow.
23 The only harm the Debtor raises is, well, it's
24 going to cost us money to litigate the case. Well, they're
25 going to spend that money anyway. We're going to try that

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1 case either in Housing Court or it's going to be tried here
2 -- I don't think that would happen, but that's what they're
3 asking. It's not as if they don't get to try the case; that
4 they can abandon the tenants' claims. The tenants' claims
5 are legitimate claims; they will get addressed somewhere, in
6 some court. So the balance of the harms is overwhelmingly
7 in favor of the tenants. The Debtor's going to spend that
8 money anyway.
9 Now, Mr. Miller, in his affidavit and the Debtor
10 try to raise all these factual issues as to what they're
11 doing and Your Honor mentioned that and again, my co-counsel
12 will address some of them. But that said, none of it
13 matters. Because what we're really talking about is, where
14 should the claims be litigated?
15 WOMAN: Right.
16 MR. PASQUALE: That's the issue on the lift stay
17 here. There is a pending proceeding. So all of those facts
18 that are raised are appropriate to be raised as potential
19 defenses to the tenants' claims; they have nothing to do
20 with the questions of, should this court -- this bankruptcy
21 court litigate those claims against the Debtor? Adjudicate
22 those claims, excuse me. Second, again, the case is ready
23 for trial tomorrow in the Housing Court. As Your Honor
24 said, Your Honor can't try this case tomorrow. I wouldn't
25 expect Your Honor to do that.

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1 THE COURT: How long is the trial expected to
2 take?
3 MR. PASQUALE: It will take a lot. I don't think
4 we know exactly yet. I wish, as I said earlier --
5 THE COURT: Yeah. I mean, I guess a lot of my
6 questions relate to that, but --
7 MR. PASQUALE: Yeah, and again, my co-counsel is -
8 -
9 THE COURT: Sure.
10 MR. PASQUALE: -- counsel off record in that case
11 --
13 MR. PASQUALE: -- so she can talk to that --
15 MR. PASQUALE: -- but it will not be quick. It
16 will not be quick. Third, Your Honor --
17 THE COURT: But the --
18 MR. PASQUALE: Yes?
19 THE COURT: But they ask --
21 THE COURT: -- the relief sought is the
22 appointment of the administrator.
23 MR. PASQUALE: Yeah. That is --
24 THE COURT: Is --
25 MR. PASQUALE: -- part of the relief in that

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1 action, correct. Correct. Absolutely, again, just to touch
2 on, you know, judicial economy again, were Your Honor to
3 agree with me in the case to get remanded, we're now looking
4 at two separate litigations.
5 Obviously, that is not efficient use of judicial
6 resources, either of this Court or the housing court. And
7 finally, and I think this is pretty significant, the Housing
8 Court is a specialized court. It was created to handle
9 exactly this type of litigation.
10 Why this Court would take the burden of litigating
11 matters designed for the Housing Court seems nonsensical.
12 Judge Beatty -- former Judge Beatty in the (indiscernible)
13 case cited in our motion said, this Court sees no reason to
14 substitute the bankruptcy court itself or the civil court as
15 the enforcement forum, speaking about a 7A proceeding, which
16 has special expertise in these matters. We would suggest
17 the Court should do the same here.
18 Your Honor, before I forget on the lift stay, were
19 Your Honor to agree and grant that relief, but also ask that
20 you waive the 14-day stay of effectiveness so that we could
21 proceed tomorrow. Your Honor, the last, you know, section I
22 had to discuss was on the dismissal. I'm happy to stop here
23 for now.
24 THE COURT: Thank you. Why don't you stop there
25 for the moment?

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1 MR. PASQUALE: Yeah.
2 THE COURT: Yeah.
3 MR. PASQUALE: And as we said in the papers,
4 that's something that does not have to be handled today.
5 THE COURT: Right. So before you sit down --
7 THE COURT: So -- because you're wearing the
8 bankruptcy hat --
10 THE COURT: -- what if I were to say to you, tell
11 you what? You're here. How about if I gave you a Chapter
12 11 Trustee?
13 MR. PASQUALE: It's something I've discussed with
14 the U.S. Trustee. I don't think that would help us very
15 much.
16 THE COURT: Can you explain that?
17 MR. PASQUALE: It seems to me that it's -- the
18 process -- the administrator will take longer, granted.
19 THE COURT: Mm hmm.
20 MR. PASQUALE: The Trustee could be in today. It
21 seems to me that -- I'm struggling because I -- the
22 interplay between --
23 THE COURT: Well, let's talk --
25 THE COURT: Let's talk about the interplay between

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1 the two of them. Maybe we can do both.
2 MR. PASQUALE: Maybe we could do both.
3 THE COURT: Maybe we could do both.
4 MR. PASQUALE: That, I would have --
5 THE COURT: And this gets to what --
7 THE COURT: -- I'll ask Ms. Rudolph about and Mr.
8 Rosen will have a chance to --
9 MR. PASQUALE: I would --
10 THE COURT: Yeah.
11 MR. PASQUALE: -- not struggle with that, Your
12 Honor, as much as alternatively between the two.
13 THE COURT: Right; to reflect on that. But to the
14 extent that there would be a functional way to have the
15 underlying Housing Court issues decided by the Housing
16 Court, who unquestionably has that expertise which I do not.
17 But at the same time, then subject to appropriate arguments
18 showings, et cetera that control of this case, the Debtor,
19 the building, the renovations be put in the hands of a
20 Chapter 11 Trustee instead of a 7A Administrator, then as
21 I'd like to say, you're here with me. I have control; I
22 have very broad enforcement powers.
23 MR. PASQUALE: Mm hmm.
24 THE COURT: I have very broad jurisdiction so that
25 I have the ability to oversee this Debtor and this case

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1 without going beyond the scope of what I know. So --
2 MR. PASQUALE: I understand, Your Honor.
3 THE COURT: And that would seem to, in its
4 entirety, address the alleged concern about the Debtor in
5 the future being deprived of a potential tax abatement,
6 which I have a lot of questions about, but among other -- it
7 has some aspects of it that frankly are appealing to me.
8 MR. PASQUALE: I understand, Your Honor. I guess
9 the only thing I'd add and I don't need -- I agree with you
10 that we need to get into the details today, but if it's a
11 bad faith filing it's still a bad faith filing. And --
13 MR. PASQUALE: -- I think we would need to discuss
14 whether or not the case has any business being in the court,
15 but I understand Your Honor's comments --
17 MR. PASQUALE: -- and I take them very seriously.
18 And it's --
19 THE COURT: Okay.
20 MR. PASQUALE: -- something we will need --
22 MR. PASQUALE: -- to discuss.
23 THE COURT: So let's everybody think about that.
24 MR. PASQUALE: So let me --
25 THE COURT: I don't think -- I can't recall if it

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1 was suggested anywhere.
2 MR. PASQUALE: It was suggested in the Debtor's
3 papers.
4 THE COURT: Yes, it was. It was.
5 MR. ROSEN: It was, Your Honor, and I'll be happy
6 to --
7 THE COURT: It was suggested in the Debtor's
8 papers.
9 MR. PASQUALE: So let me see the podium, please,
10 and I --
11 THE COURT: Yeah, sure.
12 MR. PASQUALE: Okay.
13 THE COURT: Okay. Thank you. Hello.
14 MS. RUDOLPH: Good afternoon, Your Honor.
15 THE COURT: Good afternoon.
16 MS. RUDOLPH: I'll just start with the basic --
17 kind of, like, the mechanics of how a 7A case works, based -
18 -
19 THE COURT: Please.
20 MS. RUDOLPH: -- on my experience and my reading
21 of the statute. We've done this in my office at The Urban
22 Justice Center on behalf of low-income tenants many times
23 before. So the actual appointment of the administrator
24 after trial is governed by the RPAPL 778.

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1 MS. RUDOLPH: It spells out exactly how the
2 administrator's to run the building and it -- and usually as
3 soon as a judgment is entered in favor of the tenants -- the
4 petitioning tenants, an order is very expeditiously issued
5 that explains exactly how the administrator will run the
6 building; that includes the tenant's receiving notice, both
7 petitioning and non-petitioning tenants, that they will be
8 depositing their rents immediately with the 7A Administrator
9 as opposed to the owner. The owner maintains the ownership
10 of the building, responsibilities for the mortgages and the
11 taxes and things like that. However, the administrator is
12 charged with making those repairs.
13 The question you had, Your Honor, seemed to be
14 about how the administrator without a pool of money to begin
15 with would be able to affect those very necessary repairs.
16 In this particular instance, there are a couple of special
17 circumstances, but typically what happens is, when you file
18 a 7A case, the 7A unit of HPD -- and HPD can speak a bit
19 more to this -- goes out and does what's called a roof to
20 cellar inspection.
22 MS. RUDOLPH: A roof to cellar inspection.
23 THE COURT: Roof to cellar, okay.
24 MS. RUDOLPH: This includes the common areas, the
25 roof, the cellar, and all of the apartments including non-

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1 petitioning apartments that they are able to get access to.
2 In this case, we --
3 THE COURT: What's the number -- what's the -- how
4 many apartments total, and how --
5 MS. RUDOLPH: Right.
6 THE COURT: -- many petitioning versus non-
7 petitioning?
8 MS. RUDOLPH: So it's a little bit complicated
9 because there are commercial units, but the residential
10 units, by my count there are 35 units, 29 of which are
11 actually occupied and then, one of them belongs to the super
12 who was recently fired, so that's actually about to be a
13 vacant unit when Mr. Miller effects the eviction, and then I
14 have 19 petitioning apartments, but because we also have
15 folks who are -- have rights to the apartments. On the
16 case, we have 29 petitioners, but 19 apartments out of the
17 29 occupied units, if that makes sense.
18 THE COURT: Nineteen of -- units out of the 29
19 occupied units?
20 MS. RUDOLPH: Correct. That is my count. There's
21 a little bit of confusion. There's also seven separate
22 commercial units, only one of which is vacant and then,
23 there are tenants who are relocated because of not having a
24 bathroom or part -- or a demolished wall or something, and
25 those tenants are living in vacant units with the consent of

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1 the owner at this point and at the direction of city
2 agencies. So it's a little bit complicated.
3 THE COURT: What's the law with respect to the
4 rights of the tenants and the obligations of the owner on
5 relocating tenants or providing alternative housing
6 arrangements because of violations that make a unit
7 uninhabitable or because of repairs to a particular unit?
8 MS. RUDOLPH: So it's a little bit complicated.
9 It depends on whether the city has placed in a vacate order.
10 Once the city has vacated the apartment officially, the
11 tenant can maintain their rights to the apartment if they're
12 rent stabilized through the state agency DHCR and then, the
13 Red Cross in conjunction with HPD will relocate the tenants.
14 In this case and that's the kind of special circumstances I
15 was getting to, not only has AEP -- HPD done their 7A scope
16 of work which lays out how much money it would cost and
17 typically our administrators are able to access a pool of
18 money from HPD who does support our case in this matter, so
19 that money's ready to go typically right away when the 7A
20 Administrator takes over, so I've had my --
21 THE COURT: The money is ready to go to defray the
22 costs of the relocated tenant?
23 MS. RUDOLPH: To help renovate the building,
24 whatever it takes. Relocating tenants; it might be putting
25 in new gas lines, putting in new sewage lines.

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1 THE COURT: But let me ask my question again --
2 MS. RUDOLPH: Okay.
3 THE COURT: -- because perhaps it wasn't clear.
4 One of the allegations has to do with doing renovations to
5 the bathroom, say line-by-line.
7 THE COURT: The A line, the B line and the C line,
8 okay? So -- and everyone seems to agree that that is
9 something you have to do. So when you're doing that and you
10 get to somebody's particular -- apartment 2E --
11 MS. RUDOLPH: Mm hmm.
12 THE COURT: -- let's say --
13 MS. RUDOLPH: Sure.
14 THE COURT: -- right, because you're doing the E
15 line, and 2E is not going to have a working bathroom and
16 there's going to be dust and the apartment, everyone can
17 agree, is not a place you would want your family to be
18 living during the renovation. Who has the monetary
19 responsibility? Who has the responsibility to find
20 alternate housing or relocation site and who pays?
21 MS. RUDOLPH: So, absolute litigation. Typically,
22 it's just whatever the landlord and the tenant negotiate.
23 If you're in Housing Court or for -- in state court for
24 maybe a damages claim, usually a Judge will order that the
25 landlord actually pay for the cost of relocation.

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1 But without litigation, it's really whatever,
2 whatever. And so at this point, prior to litigation,
3 several tenants had been relocated at their own expense;
4 paying rent elsewhere or just sort of living between two
5 apartments, cooking in one apartment, going to bathroom in
6 another. We're talking about tenants with children.
7 The biggest concern and the reason we filed this
8 case, at least -- like, I filed it almost immediately after
9 entering the building was because of the landlord enter --
10 and landlord's agents entering the building, unlicensed
11 contractors saying, you know, we're going to do a repair,
12 ripping out a bathroom that has lead paint in the walls, and
13 releasing lead dust.
14 And so one of the biggest concerns of the
15 Department of Health -- which is a party in this case -- has
16 placed many violations for lead dust and several children
17 have tested positive for lead poisoning.
18 So that work is continuing where we had, as
19 recently as December 19th the landlord go in or landlords'
20 workers go in, knock on the door of apartment 2C where a
21 child resides, say, you know, we're going to fix a wall up
22 or just patch a hole, demolish part of the wall, release
23 lead dust, and we do have violations for both lead paint in
24 those apartments, class A violations, and lead dust placed
25 by two separate city agencies.

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1 So what you have here is not just the fact that we
2 have a lot of work that needs to get done, but the manner in
3 which has gotten done in the past and has been done since we
4 started this litigation is extremely problematic.
5 And what's more problematic is when we went back
6 to court on an emergency motion to try to get that work to
7 stop and to get them to abate the lead in apartments
8 (indiscernible) correctly on December 23rd, I let their
9 attorneys know about the OSC on December 21st and they
10 immediately filed this matter for bankruptcy court and told
11 me that we could not appear. So there's been an attempt to
12 delay.
13 Furthermore, the trial's tomorrow, yes, but my
14 adversary in Housing Court refused to file an answer as per
15 the Judge's orders in the Housing Court case. And I assume
16 they're going to use that as a basis to say they're not
17 trial-ready even though the Judge ordered --
18 THE COURT: Is that true, Mr. Rosen?
19 MR. ROSEN: I don't know, Your Honor. I believe
20 they took the position --
21 THE COURT: What do you mean you don't know?
22 MR. ROSEN: Can I check with my client? Let me
23 talk to him.
24 THE COURT: Well, first of all, let's have --
25 let's do -- we'll do a little bankruptcy law, okay? Mr.

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1 Pasquale will, I think, probably tell you that Mr. Rosen was
2 within his rights in not filing an answer because once the
3 petition is filed -- which I know it's your position that it
4 was filed in bad faith -- a stay does come into place.
5 Okay? And Mr. Pasquale's agreeing with me.
6 MR. PASQUALE: Right. We're here, Your Honor,
7 and, Your Honor, that --
8 THE COURT: Okay. But -- so that's why we're
9 here. So -- and I'll give you a little lesson in
10 bankruptcy; there is case law to the effect that -- well,
11 that there would need to be relief from the automatic stay
12 even for the Debtor to file a pleading that would defend its
13 rights.
14 MS. RUDOLPH: Fair enough, but --
15 THE COURT: But the point that you're raising is
16 something that I'm going to be interested in because if
17 that's something that the Debtor intends to do, that's
18 something I want to know about today.
19 MS. RUDOLPH: This is -- my point was, that this
20 is a delay tactic to try to hide from what could have
21 resulted and may have resulted in lead poisoning in children
22 and that's -- that is kind of the point. But, I think, to
23 return to your questions about the 7A --
24 THE COURT: Sure.
25 MS. RUDOLPH: -- there are two extenuating

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1 circumstances in this case.
2 One is, HPD has been in the building since 2013
3 because the building is the Alternative Enforcement Program,
4 which is the program for the 200 worse buildings. It has
5 remained there since 2013 while HPD has also been in court
6 prosecuting their own action for enforcement and is at the
7 civil and criminal contempt stage which is also scheduled
8 for tomorrow morning, their hearing on that matter.
9 So I guess because AEP has done a scope of work
10 and knows what the costs are and has already lent money to
11 Mr. Miller, the real difference is not going to be, is the
12 city going to be giving money to Mr. Miller or to an
13 administrator. So the question really is, who is going to
14 be in charge of that pool of money that AEP and HPD are
15 already giving to the 7A Administrator -- to the owner?
16 THE COURT: But there's an identifiable pool of
17 money that's available to remediate and repair this
18 building?
19 MS. RUDOLPH: Well right now, AEP -- we -- in
20 order to file a 7A, you need to do a title search and find
21 out who has given money, who has liens, so HPD, the city of
22 New York, ECB, all are also parties to this case, both as
23 enforcement agencies and lien holders, but the city is -- I
24 -- and the city can speak more to this, but the city has
25 already given Mr. Miller loans to help rehabilitate this

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1 property.
2 Our position is that he has abused that money and
3 used it to essentially try to vacate the building by causing
4 essentially what is --
5 THE COURT: Constructive evictions.
6 MS. RUDOLPH: Constructive eviction is the word I
7 was looking for. So we're at a point here where it's an
8 absolute emergency. I receive calls from my clients, many
9 of whom are here today, at all hours of the night; bursted
10 pipe, gas leak, you know, lead dust, all kinds of issues,
11 lack of heat and hot water at the beginning of the season
12 and this is a constant emergency. I mean, I do not sleep
13 because of this case and neither do my clients and I imagine
14 it's much worse for them.
15 So I think that the real question is, who's going
16 to manage the money? Is it going to be Mr. Miller or is it
17 going to be the 7A Administrator who will have access to
18 grants and interest-free loans and I think the city can
19 speak more about that but that is a huge part of our case
20 and why HPD is a party, and why HPD supports our case and
21 would testify in our case about what needs to get done and
22 how it needs to get done, and we hope that a 7A
23 Administrator would be able to do the work in a way that
24 respects the health, life and dignity of our clients, which
25 has not happened thus far and that's really the concern.

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1 So I would also say that the statute requires RPAL
2 -- RPAPL 774 requires a trial within five days of the first
3 appearance. We did extend the time that the landlord could
4 answer as a courtesy, a courtesy which we -- which was
5 abused, especially knowing that the holidays were coming.
6 So this comes as quite -- I wouldn't say a shock, but is
7 quite prejudicial to our clients at this juncture when we're
8 trial-ready and we gave them far more than the five days
9 that the statute allows for an adjournment out of a courtesy
10 over the holidays and because they requested it.
11 THE COURT: All right. Thank you.
12 MS. CACUCI: May I approach?
13 THE COURT: Sure.
14 MS. CACUCI: Just a few points. First of all, in
15 terms of the papers that I filed last night, Your Honor,
16 just wanted to make sure because it seemed like at least it
17 was implied they’re expressed in the opposition that, you
18 know, somehow HPD and the tenants were not on the same side
19 and I wanted to make sure that the Court understands that
20 HPD is supporting, you know, the tenants' position so that
21 there's no question about that and then of course the relief
22 that tenants are asking, as well.
23 In terms of -- I would like to address a little
24 bit the suggestion of a Chapter 11 Trustee, Your Honor, and
25 I think --

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1 THE COURT: Yes.
2 MS. CACUCI: -- I find that -- I think that'll be
3 very problematic because that would mean the third layer of
4 expense. Again, this case has --
5 THE COURT: What are the three?
6 MS. CACUCI: Right. The -- first of all, because
7 the building has had so many issues, as I mentioned in my
8 papers, it was twice in the Alternative Enforcement Program.
9 THE COURT: Yes.
10 MS. CACUCI: The first fund right before -- up to
11 two months before the Debtor acquired the property. It was
12 out of the program in June, then the acquired it in August,
13 and then it was placed again in 2013.
14 When a building is placed in this program -- Mr.
15 Rosen is very familiar with the program because he's had
16 other cases -- there is an additional layer of expenses.
17 You know, the reason -- and it's all statutory. The reason
18 HPD is forced to do this just really to compel the property
19 owner and the principal, whoever's responsible under the
20 municipal codes for ownership, to do something. So that
21 means additional inspection fees --
23 MS. CACUCI: -- additional --
24 THE COURT: Okay.
25 MS. CACUCI: -- you know, enforcing compliance.

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1 So --
2 THE COURT: Right.
3 MS. CACUCI: -- that in itself --
4 THE COURT: Okay.
5 MS. CACUCI: -- makes it very expensive, and --
6 THE COURT: Okay.
7 MS. CACUCI: -- so the building has been --
8 THE COURT: Sure.
9 MS. CACUCI: -- for four years in that. Then, on
10 top of that, if the 7A is appointed, that makes it even more
11 expenses -- expensive because, again, they're additional
12 things that have to happen. Under the AEP program, they're
13 mandated to make -- so they're beyond making ordinary, you
14 know, little repairs here and there. HPD had to compel them
15 to make capital improvements because --
17 MS. CACUCI: -- you know, they're required. So,
18 you know, to have a Trustee, the Trustee could not displace,
19 you know, the AEP program. That has to stay in place.
20 THE COURT: Right, but why do --
21 MS. CACUCI: So --
22 THE COURT: -- you have to have the AEP program
23 and -- right now, you have the AEP program and the Debtor in
24 control.
25 MS. CACUCI: Right.

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1 THE COURT: Right? So as you know, if a Chapter
2 11 Trustee came in, the Debtor -- they -- the Debtor would
3 no longer --
5 THE COURT: -- be in control.
7 THE COURT: The Chapter 11 Trustee would be in
8 control.
9 MS. CACUCI: Right, but how would the Trustee make
10 -- what would be the role, really, and how would -- in terms
11 of the repairs and all that?
12 THE COURT: That the Chapter 11 Trustee would --
13 MS. CACUCI: They would have to hire all kinds of
14 -- the --
15 THE COURT: So imagine the person who would be --
16 serve as the 7A Administrator.
18 THE COURT: Is -- instead of wearing that hat, as
19 a hat that says Chapter 11 Trustee.
20 MS. CACUCI: Yeah, but the difference is that the
21 7A Administrators do just that.
22 THE COURT: I understand.
23 MS. CACUCI: And they're very knowledgeable and
24 qualified to do that kind of housing work, whereas, a
25 Chapter 11 Bankruptcy Trustee, you know, would call the city

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1 and say, what do I do now? It's just a totally different
2 ball game. I also want to make one other point in terms of
3 the funding. There are kind of a few things that I need to
4 address, and my colleague from HPD is going to also --
5 THE COURT: What's the recourse of the tenants?
6 So the 7A Administrator is put in place and things don't go
7 smoothly.
8 MS. CACUCI: In terms of repairs?
9 THE COURT: Repairs.
10 MS. AN: I can speak to that.
11 MS. CACUCI: Yes, you can.
12 THE COURT: Yeah. My -- I mean, the -- my notion
13 -- and I'm being educated on this, obviously, is that I
14 think the tenants want recourse, they want someone to be
15 responsive to their needs and concerns and have the
16 assurance that things are going to move forward.
17 MS. CACUCI: Yeah.
18 THE COURT: So would --
19 MS. CACUCI: The 7A Administrator works hand-in-
20 hand with HPD, and HPD approved contractors and companies
21 and, you know, they all have to have the experience and
22 they're vetted by HPD as far as I'm concerned. And also --
23 because in terms of the funding -- and then my colleague
24 address that, as well -- normally -- and again, I say
25 normally --

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2 MS. CACUCI: -- because maybe this case is a
3 little bit unusual in the sense that it appears that Mr.
4 Miller is an equity owner and is part of some pension-
5 sharing plan -- anyway. So he may have some money,
6 personally and he's already invested some money in the
7 property. In a lot of cases, there is no money, and repairs
8 have to be made, and then the 7A Administrator is authorized
9 by --
10 THE COURT: Okay.
11 MS. CACUCI: -- statute to borrow from the city.
12 When they borrow money from the city, of course, the city
13 then, you know, there are all kinds of protections and so on
14 and the city can impose a lien.
15 THE COURT: Is that -- so is that where we are
16 now, is the -- are at -- because the petition doesn't shed
17 any light on this, Mr. Rosen. What -- is the first
18 mortgagee on the property now the city?
19 MR. ROSEN: No.
20 MS. CACUCI: No, no.
21 THE COURT: Or is it a private lender?
22 MR. ROSEN: No. It's a --
23 MS. CACUCI: It's a commercial lender.
24 MR. ROSEN: -- commercial lender, Your Honor.
25 THE COURT: Commercial lender. Okay.

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1 MR. ROSEN: And just to point out, what's being
2 said here and not being said is --
3 THE COURT: Mr. Rosen --
4 MR. ROSEN: Okay, I'm sorry.
5 THE COURT: -- I only asked one question.
6 MS. CACUCI: The city has not, to my knowledge,
7 and my colleague --
8 THE COURT: Okay.
9 MS. CACUCI: -- will speak to that --
10 THE COURT: Ms. Rudolph said that money was
11 loaned.
12 MS. CACUCI: No, apparently, that has not --
13 THE COURT: That has not occurred.
14 MS. CACUCI: -- happened yet, and I -- I've -- as
15 far -- you know --
16 THE COURT: Has money been granted?
17 MR. ROSEN: No.
18 THE COURT: No?
19 MS. AN: Your Honor, no. As far as I know, there
20 --
21 THE COURT: Thank you.
22 MS. AN: -- has been talks of giving some funding
23 to the owner, but that never came to fruition.
24 MR. PASQUALE: Your Honor, I can clarify that --
25 THE COURT: Okay.

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1 WOMAN: -- if you like.
3 MS. CACUCI: And as far as I --
4 WOMAN: May I --
5 MS. CACUCI: -- know, the city does not yet --
6 again, you know, I was not part of any negotiations, but I -
7 -
9 MS. CACUCI: -- did check in terms of what I know
10 normally happens, and they're not -- there are not any liens
11 yet by the city on account of funding or on account of
12 tenant relocations because -- and I want to go through
13 relocations --
14 THE COURT: Does the city -- when the city would
15 make a loan, they would -- what -- so, hypothetically --
17 THE COURT: -- and I have no idea, but
18 hypothetically, if it -- and just common sense tells me that
19 there's a difference between doing repairs on an emergency
20 basis, on kind of a scattered basis and undertaking a
21 complete plan, right? It seems to me that the latter might
22 be more cost efficient than the former. So there would have
23 to be a scope of work and there would have to be a budget.
24 So, hypothetically, say that that number is a half a million
25 dollars, okay? And the city would -- one or more of the

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1 agencies would either -- this is a question -- make a grant
2 and/or make a loan in order to finance that? Is that --
3 MS. CACUCI: There's never grant, but yes.
4 THE COURT: Oh, a loan. Okay, and would the loan
5 be in a priming position? Would it be --
6 MS. CACUCI: Yes.
7 THE COURT: It would be secured by a lien in the
8 first position?
9 MS. CACUCI: The primary responsibility -- it's
10 all statutory, but, you know, a property owner in New York
11 City has a lot of responsibilities and basically an owner's
12 responsible to maintain, to make just very simple in
13 accordance of maintain -- you know, housing maintenance
14 code, building code, everything else; it's completely the
15 owner's responsibility.
16 And then if the owner doesn't do what they're
17 supposed to do, the city's trying to, again, put pressure
18 and compel them to do it, which is -- you know, by way of
19 notices and violations and all of this, which we have
20 hundreds of, as it -- and then, you know, motions for
21 sanctions and --
22 THE COURT: Sure. So --
23 MS. CACUCI: And then, of course, you have this
24 type of programming, where the repairs are just -- you need
25 here and there, and if there is no money this is when the

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1 city's --
2 THE COURT: Understood.
3 MS. CACUCI: -- (indiscernible) have the --
4 THE COURT: Okay.
5 MS. CACUCI: -- emergency repair liens --
6 THE COURT: Got it.
7 MS. CACUCI: -- and they become in the priming
8 position. When much more has to be done, such as capital
9 repairs, again, initially if the owner has the funds and it
10 sounds ells like in this case, you know, they put some
11 money, I don't know, maybe, you know, at what point they
12 started the negotiations, but right now, as far as I know,
13 there are no liens for capital repairs by the city.
15 MS. CACUCI: Also, I don't necessarily -- and I
16 don't -- I tried to find out the answer the other day. It's
17 very hard because you need to contact so many agencies, and
18 --
20 MS. CACUCI: -- even for us, this was a very short
21 notice. So I appreciate the Court's --
23 MS. CACUCI: -- responding fast. But I don't
24 think there's necessarily -- even though a 7A Administrator
25 by statute has control over the property, I don't

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1 necessarily think that -- if the owner has funds, I don't
2 think that the owner is necessarily precluded from --
3 THE COURT: Okay, but there's something -- but the
4 city can't --
5 MS. CACUCI: -- putting that money --
6 THE COURT: Right, but the city --
7 MS. CACUCI: -- (indiscernible) city.
8 THE COURT: -- can't compel -- the city can't
9 compel the owner to -- that's my question.
10 MS. CACUCI: I don't know if they can compel the
11 owner, but --
12 THE COURT: I don't think the city could compel
13 the owner to continue to contribute, if you will, the funds.
14 So my next question is, one of the things that the Debtor
15 has said in its papers is that if you go down the 7A route
16 and the funding is put in place from the city or some other
17 source, that that would cause an event of default under the
18 existing --
19 MS. CACUCI: Maybe.
20 THE COURT: -- mortgage. So --
21 MS. CACUCI: There are no facts. I -- you know,
22 the Debtor -- it's the Debtor's obligation to indicate what
23 the situation is with the mortgage. And also, I was
24 advised, and I don't know, but -- that apparently, initially
25 was this Debtor that was the purchaser of the mortgage.

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1 MR. ROSEN: Mm hmm.
2 MS. CACUCI: So I don't know whether it got
3 assigned or what the situation is, but there's nothing in
4 Mr. Rosen's papers --
5 THE COURT: We're going to talk --
6 MS. CACUCI: -- indicating who --
7 THE COURT: We're going to talk about that.
8 MS. CACUCI: -- the mortgagee is --
9 THE COURT: We're going to talk about it.
10 MS. CACUCI: -- what the situation is.
11 THE COURT: We're going to find out that.
12 MS. CACUCI: And it's also unusual that the
13 mortgagee would not put a notice of appearance in a case
14 like this.
15 THE COURT: Well, it's moving pretty quickly.
16 MS. CACUCI: But we're going to (indiscernible)
17 THE COURT: We're going to find out. The petition
18 --
20 THE COURT: -- doesn't shed any light on that.
21 MS. CACUCI: I don't know J51, you know, I don't
22 know if it's something they contemplate. I don't know if
23 it's something they contemplate --
24 THE COURT: That's the taxable one?
25 MS. CACUCI: Right. I don't know. You know, that

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1 would be completely up to HPD to determine if an obligation
2 is made, and it's very nebulous as to who had made the
3 application. I don't know; I tried to find out if it's
4 property-based or not. So it may very well be, if it's not
5 owner-based, then Mr. Miller may want to do that and he owns
6 several properties, and I don't know that --
7 THE COURT: All right. We'll find out. Well,
8 that's a little --
9 MS. CACUCI: -- that would inure to the Creditor's
10 benefit.
11 THE COURT: Okay. All right.
12 MS. CACUCI: But just on the relocation, it's a
13 little bit complicated that different agencies sometimes
14 with concurrent jurisdiction and it depends which one steps
15 in. As Stephanie indicated, sometimes could be the Red
16 Cross, whatever. I know from talking to the Department of
17 Health that right now there are these two tenants that
18 apparently are under the Department of Health jurisdiction.
19 Their house under the DOE fund or something like that, so it
20 could be that those expenses to the extent they're incurred
21 by the city and I've had that in a different case, then, you
22 know, the city agency could approve a client if they
23 incurred the --
24 THE COURT: I see.
25 MS. CACUCI: -- relocation expenses. Also, I've

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1 had a case with a lot of relocations where, you know, the
2 department building said you should have full vacate order,
3 so all the buildings had to be -- in this case have been
4 some partial vacate orders. And in that case --
5 MR. ROSEN: (indiscernible)
6 MS. CACUCI: -- if the city is required to then
7 find scattered or housing for those --
8 THE COURT: Right.
9 MS. CACUCI: -- tenants, again, those would be
10 primer liens because it is, in the end, the owner's
11 obligation to take care of the property, to maintain the
12 property, and when you purchase a property -- whether in
13 bankruptcy or otherwise -- you have the burden to maintain
14 it.
15 THE COURT: Okay.
16 MS. CACUCI: Thank you, Your Honor. I -- do you
17 have anything else?
18 MS. AN: No, I don't.
19 MS. CACUCI: Okay, thanks.
20 MS. AN: All right.
21 MR. ROSEN: My turn?
22 THE COURT: Yes, Mr. Rosen.
23 MR. ROSEN: Thank you, Your Honor. Good
24 afternoon, Your Honor. Avrum Rosen for the Debtor. Let me
25 -- let me just clear up a couple of misconceptions that are

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1 out there right off the bat that made sure things. First,
2 DOE funds -- there are no -- there's only been on partial
3 vacate order that we're aware of and that's because when we
4 move people into the super's apartment to get them out, one
5 of the other ones and we have that. Everybody else has been
6 voluntarily located. If you look through the evidence we
7 put in and the emails, you will see that we have paid for
8 someone to go to another building; that we have moved people
9 around the apartments; that people have -- some people have
10 gone. Some people have refused.
11 To answer your concern, we're going to be very
12 focused on what I think your concerns are.
13 THE COURT: So why don't you answer the -- why
14 don't you say whether or not you dispute Ms. Rudolph's
15 recitation of facts relating to the lead issue and the lead
16 poisoning and the lead dust?
17 MR. ROSEN: I do -- to a certain degree, Your
18 Honor, I do very much. Because the reason why this petition
19 -- if you look at that stipulation that was entered into --
20 THE COURT: I'm not -- that's not my question.
21 I'm asking you a question. Ms. Rudolph has stated
22 affirmatively that there was an unlicensed contractor who
23 did a demolition that caused the release of lead dust and
24 that there are children who have tested positively for lead
25 -- true or false?

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1 MR. ROSEN: There's four questions there. I do
2 not believe there was anyone there unlicensed. There was a
3 contractor back there in August who was doing work that we -
4 -
5 THE COURT: Do you know whether or not he was
6 unlicensed or not?
7 MR. ROSEN: I can check. The contractor that was
8 there, that we hired was licensed. Every --
9 THE COURT: Did the contractor who did the -- was
10 the contractor who did the demolition licensed or
11 unlicensed?
12 MR. ROSEN: May I show it to my client?
13 THE COURT: Please.
14 MR. ROSEN: My understanding is everyone in that
15 building was licensed, Your Honor. Is that correct?
16 THE COURT: I'm asking a very specific and pointed
17 question. Did the contractor who did the demo that caused
18 the lead to be released, was that contractor licensed?
19 MR. ROSEN: May I have a second, Your Honor?
20 THE COURT: Yes.
21 MR. ROSEN: There was no demo in that apartment?
22 Okay. My client's telling me there was no demolition done
23 in that apartment. Your Honor, if I can step back a second
24 --
25 THE COURT: No, you cannot step back. I am asking

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1 you a series of questions.
2 MR. ROSEN: Okay.
3 THE COURT: Counsel for the tenants has made the
4 statements that there was a demolition (a) done, okay. Was
5 there a demolition done?
6 MR. ROSEN: No, my client says there's not. There
7 was a plumber in there. We had contractors -- if I can go
8 through it, Your Honor --
9 THE COURT: No.
10 MR. ROSEN: Okay.
11 THE COURT: You're going to answer my questions.
12 MR. ROSEN: Okay. My client says --
13 THE COURT: Counsel has stated --
14 MR. ROSEN: -- there was no unlicensed contractor
15 in there and there was no demolition done.
16 THE COURT: Counsel has stated that there was lead
17 dust released into the building; true or false?
18 MR. ROSEN: Yes.
19 THE COURT: Who released it?
20 MR. ROSEN: The contract -- the licensed
21 contractor that was there. If you go through the emails in
22 there, you will --
23 THE COURT: I'm not going to go through the
24 emails.
25 MR. ROSEN: Well, you don't even have to go

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1 through the emails, but this --
2 THE COURT: Mr. Rosen, this is not going to go
3 well if you're going to argue with me.
4 MR. ROSEN: Okay.
5 THE COURT: All right? I am --
6 MR. ROSEN: Your Honor, we fired -- the answer is
7 we fired the contractor.
8 THE COURT: Mr. Rosen, that's your second warning.
9 MR. ROSEN: Okay. Go ahead.
10 THE COURT: Counsel has stated that children in
11 the building tested positively for lead, true or false?
12 MR. ROSEN: My understanding is that is true.
13 THE COURT: And how did that happen?
14 MR. ROSEN: That's my understanding of what
15 happened from the record that we've put in that's there is
16 that the prior contractor, who was licensed, who was on the
17 job was doing sloppy work. Work was raised -- that was
18 raised to us, we reprimanded him.
19 It came up again when somebody from HPD -- because
20 people from HPD were there every other day, sometimes every
21 day supervising the work and they complained again and
22 brought it up on August 31st. That person was promptly --
23 was told to stop it; to get everything together and at that
24 point, they walked off the job and we hired another licensed
25 contractor who -- the contractor I've attached from the

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1 second week of September who has been doing the work since
2 there. We've also hired some of the preeminent lead
3 abatement people to go in there and the reason why -- I
4 won't go beyond your questions, Your Honor. I answered that
5 question. We attached and gave you the evidence, Your
6 Honor, that yes, there were problems there. And we fired
7 the person and got somebody else.
8 THE COURT: Show me in your submission the
9 documents that rebuke --
10 MR. ROSEN: Sure.
11 THE COURT: -- the assertion that's made with
12 respect to apartment, I think it was 2C, Ms. Rudolph.
13 MS. RUDOLPH: So -- but I want to just clarify,
14 there have been multiple with young children where lead dust
15 has been released. The apartment where the lead poisoning
16 occurred happened back -- in his time frame in August and
17 that's apartment 1D where two children are tested positive.
18 I have the results for one of the children in front of me.
19 THE COURT: Okay.
20 MS. RUDOLPH: In terms of apartment 2C, that was
21 an example of how after the "firing of the bad contractors"
22 we still had this problematic work happening under the guise
23 that we're just going to fix something and while being torn
24 down with lead paint and dust being released. That's 2C --
25 that happened December 19th, but what he's referring to is

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1 stuff that happened back in August in multiple, multiple
2 apartments --
3 THE COURT: Right, I was focusing --
5 THE COURT: -- focusing on the --
6 MS. RUDOLPH: So we don't know if the child in 2C
7 has tested positive yet.
8 THE COURT: I see.
9 MS. RUDOLPH: Because it just happened.
10 THE COURT: Very good. Okay. So there --
11 MR. ROSEN: (indiscernible)
12 THE COURT: -- were a bunch of facts that were
13 being inflated.
14 MR. ROSEN: But the answer is so now you
15 understand, Your Honor. We had a problem with someone. We
16 fired them and we got another contractor.
17 THE COURT: Okay.
18 MR. ROSEN: Okay. On the one that happened now,
19 if we can take a second back and we just understand and I
20 think you do, but I want to walk you through the
21 construction problems. The other thing that you have to
22 understand also, we have now -- so dealing with the vacate
23 issues, I just want to clear up a couple of things fast.
24 On the vacate issues what we've done is, as
25 apartments have freed up and as we -- remember, we have

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1 fire, so we have three or four apartments completely out of
2 work. We got ran out of them.
3 I've attached the photographs so you see what they
4 look like when they're done and what all the bathrooms will
5 look like when we're done. As soon as we have all those
6 apartments done, we now have four or five apartments freed
7 up. We do five apartments at a time. We can move people
8 into the finished apartment and not have people in the
9 apartments.
10 THE COURT: And so aren't these people so excited
11 and happy?
12 MR. ROSEN: I don't know. Your Honor, well,
13 that's what we're talking about --
14 THE COURT: Well, let's find out because your
15 papers, Mr. Rosen --
17 THE COURT: -- your papers portray this as being
18 all the tenants' fault.
19 MR. ROSEN: No, I didn't say that, Your Honor, I
20 didn't.
21 THE COURT: Well, I can --
22 MR. ROSEN: I said there was a fire. I said there
23 was some issues with some tenants. Your Honor, we did two
24 stacks in this building. We did them with no problems.
25 We're on the east, which are just about done and we've had

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1 lots of problems. I think you can see from the emails, Your
2 Honor, and there weren't bold -- they weren't just
3 statements. We attached detailed emails with the back and
4 forth.
5 As you can see in the state court -- in the civil
6 court, my client has authorized counsel to communicate
7 directly with them. There were emails on a daily basis
8 going back over problems. We've got people -- the problem
9 with these, if the person in the first floor or the second
10 floor won't get out --
11 THE COURT: I understand.
12 MR. ROSEN: -- it stops the whole job. Right now,
13 because we've offered -- there's even an email that I have -
14 - we offered to put someone up in a hotel, so they don't --
15 they don't want any more dust -- they don't want any dust.
16 We've offered them to more out; they don't want to move out.
17 They won't let us in. We offered to put them into a hotel.
18 So meanwhile, the problem is and we're giving --
19 in order to let them out, we're giving a stipulation that
20 says you have to waive any rights to get any rent increases
21 based on anything you do in the building, which would been
22 applied to the whole building, Your Honor.
23 So when that stuff happens, we're not making vague
24 allegations. We're giving you a -- every allegation that
25 we've made there, we have given you backup document from it,

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1 in admissible form that shows you that there are issues
2 here. And to go to the heart of the -- and so the other
3 things so you understand first, we have a commercial
4 mortgage with Flushing Bank, all right. We --
5 THE COURT: How much?
6 MR. ROSEN: A couple of million dollars?
7 MAN 1: About $2.3 million.
8 MR. ROSEN: $2.3 million.
9 THE COURT: What's the yearly debt service on that
10 mortgage?
11 MR. ROSEN: You’ve got on the spreadsheet there --
12 do you have the yearly debt service?
13 THE COURT: Eighty something thousand dollars?
14 MR. ROSEN: No, including principal and interest
15 it's more. I don't know, as I sit here.
16 THE COURT: Well, let's find out.
17 MR. ROSEN: Okay. So we've got that issue. As I
18 --
19 THE COURT: Hold on.
20 MR. ROSEN: Okay.
21 THE COURT: General ledger, Exhibit K to the
22 Debtor's response -- direct expenses.
23 MR. ROSEN: Broken out by principal in here, I
24 think, and interest. We gave you one month for the last
25 month and then we gave you over a couple of years. So I

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1 don't know if you're going to be able to break out by year,
2 Your Honor.
3 THE COURT: Well, let's take a look. Yeah, here
4 we go. So page 3 of Exhibit K, debt expense, first mortgage
5 --
6 MR. ROSEN: Interest is 70 --
7 THE COURT: -- year-to-date --
8 MR. ROSEN: -- yeah, but that's one month, Your
9 Honor, so it's $7,800 a month on interest without principal.
10 THE COURT: No, there's a year-to-date column.
11 MR. ROSEN: Oh, I'm sorry.
12 THE COURT: Right, you see period to date?
13 MR. ROSEN: Yep, mm hmm.
14 THE COURT: Year-to-date.
15 MR. ROSEN: $86,000.
16 THE COURT: Okay, $86,000.
17 MR. ROSEN: Of interest without principal.
18 THE COURT: Right, mortgage payments -- I don't
19 know what that -- so interest, there looks like there's a
20 little bit of an amortization of principal. So $86,000 is
21 not a whole heck of a lot, right?
22 MR. ROSEN: No, no, but it's still -- Your Honor,
23 my point is, you've heard the city say if the 7A
24 Administrator comes in, whatever funds go into it to finish
25 this will prime that mortgage and spark a default.

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1 THE COURT: Okay and?
2 MR. ROSEN: To answer your other questions in
3 there, all right --
4 THE COURT: Have you approached --
5 MR. ROSEN: We haven't. We've been trying to get
6 them to assign counselor. We've reached out to them twice.
7 They haven't assigned counsel yet.
8 THE COURT: Who is it -- who did you say it was?
9 MR. ROSEN: Flushing Bank.
10 THE COURT: Flushing Bank?
11 MR. ROSEN: Yeah, they haven't assigned counsel
12 yet. If you want to talk to them --
13 THE COURT: What's the likelihood that they're
14 going want to go into default and foreclose on this
15 property?
16 MR. ROSEN: It depends on how much money they'll
17 get -- the 7A Administrator. If the 7A Administrator --
18 THE COURT: How much is the building worth?
19 MR. ROSEN: We think the building's worth $5
20 million.
21 THE COURT: Yeah, so it's not going to happen,
22 right?
23 MR. ROSEN: Well, I don't know, Your Honor,
24 because there's going to be at least $500,000 worth of work
25 --

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1 THE COURT: Right.
2 MR. ROSEN: -- and if the city does this --
3 THE COURT: So your mortgage is --
4 MR. ROSEN: -- it's probably going to be a million
5 -- it'll probably be up over a million by the time you're
6 done. You going to have to get all new permits; you're
7 going to have to get -- you're going to have the expenses of
8 the 7A Administrator; you're going to have all -- everything
9 else going there. And I'll address your core issue of where
10 you think this is going in a minute. But it's not an
11 inexpensive process.
12 THE COURT: Okay, so at that level --
13 MR. ROSEN: So the answer is --
14 THE COURT: -- at that level the Debtor is still
15 going to -- how much did the Debtor pay for the building --
16 for the mortgage?
17 MS. CACUCI: $3.7 million.
18 THE COURT: How much?
19 MS. CACUCI: $3.7 million.
20 THE COURT: 3.7?
21 MR. ROSEN: Right and they put over -- and they've
22 already put over a million into it.
23 THE COURT: A million?
24 MR. ROSEN: Yeah.
25 MS. CACUCI: According to the papers, $700 --

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1 MR. ROSEN: Can I ask her not to interrupt me?
2 THE COURT: Ms. Cacuci?
3 MS. CACUCI: Sorry.
4 THE COURT: You know that those are the rules.
5 MR. ROSEN: All right, we've got $750,000 in
6 additional over all of the rent roll that's gone in, plus
7 there were fire insurance proceeds, the amount from the
8 apartment; the amount that's gone in is about $1.2 million.
9 THE COURT: Okay, the Debtor's investment --
10 MR. ROSEN: And we anticipate at least another --
11 THE COURT: -- the Debtor's investment --
12 MR. ROSEN: -- half a million dollars.
13 THE COURT: I'm sorry.
14 MR. ROSEN: We anticipate at least another laying
15 out another half a million dollars.
16 THE COURT: And you don't believe that if you went
17 to the first mortgagee that you would get covenant relief to
18 allow for a priming?
19 MR. ROSEN: I don't know, Your Honor, but the --
20 THE COURT: Have you asked?
21 MR. ROSEN: No, because they haven't responded to
22 us yet. We just got served with -- we haven't even
23 responded to us on trying to work out something on cash
24 collateral. All right, I mean, the answer is, Your Honor --
25 what wasn't explained to you is my understanding is that to

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1 do that -- to prime them, they have to commence a separate
2 action for them to get the financing to prime the mortgagee
3 on the 7A. And to answer the first question that I think
4 you asked was it was my client's understanding --
5 THE COURT: What you are saying is, don't do any
6 of this --
7 MR. ROSEN: No, I'm not saying that. Sorry.
8 THE COURT: -- don't do any of this. Allow the
9 Debtor to remain in control and the Debtor will continue to
10 put that money in, right?
11 MR. ROSEN: Actually, Your Honor, I'm saying a lot
12 less than that, right. But what -- can I --
13 THE COURT: Well, no, no, no. But the threshold
14 question is, what's the commitment of the equity owner to
15 fund the ongoing remediation and renovation of the building?
16 Because if it's a matter of priming then, the owner can
17 still put the money into the building and not be primed.
18 MR. ROSEN: Okay, it is my client's understanding
19 of the law and I haven't heard anyone -- no one knows the
20 answer here, but from reading the J51 and reading the other
21 things, the client must put the money -- the client must put
22 the money in. So if it's --
23 THE COURT: So let him put it in.
24 MR. ROSEN: -- but if the J -- if there's a 7A
25 Administrator extending the funds, this is his understanding

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1 that he loses the right to go for the J51 and you get --
2 loses the right to go for the rent increases on that.
3 THE COURT: There's --
4 MR. ROSEN: That's -- this is a very technical
5 statute, that's it.
6 THE COURT: Okay, I do technical all the time.
7 MR. ROSEN: I know --
8 THE COURT: You know what, and that just is not --
9 that, that's not at all complacent.
10 MR. ROSEN: And, of course, he doesn't know the
11 answer and I -- from my understanding, that's the answer.
12 So -- can I -- if I can -- I want to -- I'll answer your
13 questions here. I have a proposal in the way I think this
14 should work and what's going on. I mean --
15 THE COURT: Well, let me --
16 MR. ROSEN: -- I have five people argue and I
17 tried to take notes to deal with all and --
18 THE COURT: Go ahead.
19 MR. ROSEN: -- I don't want anything to get lost.
20 Your Honor, let's go to your issue -- your concept of the
21 operating trustee because we did raise it in the papers, all
22 right? And the issue here is ,despite what the City of New
23 York is saying and what we said, again, we conceded. And I
24 did the research on this before we filed, you know. We
25 conceded that we could not -- that there was halting the 7A,

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1 rather the New York City's action, right. And New York
2 City's action will continue to go forward. The contempt
3 proceeding will go and will compliance.
4 Our problem has been, which I tried to lay forth
5 to you, we've been the catch 22. Because he's in the AEP
6 Program and we've gone through the fact that he's cured an
7 awful lot of those violations. He can't get them cleared of
8 record until he comes out, but hundreds of violations have
9 been cleared.
10 The roof's been replaced. The gas lines have been
11 replaced. A bunch of the risers have been replaced. A lot
12 of -- the entire electrical system's been replaced. There's
13 a -- if you go through there, there's proof in there,
14 especially if you look at the October report which he gave
15 which is Exhibit J to the papers, the (indiscernible) report
16 which we gave to AEP going through what had been done and
17 what's still open at the end of August, rather, I think it's
18 October.
19 You'll see there's been a tremendous amount of
20 work. There was an inspection there the other day and we --
21 THE COURT: Then why are the number of violations
22 go up?
23 MR. ROSEN: Because they don't -- won't clear the
24 old ones of record until you're coming out of
25 (indiscernible).

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1 Supposedly, yesterday, they went through the area
2 and got told there's almost a hundred violations coming off.
3 As we repair thing, the idea on doing all of these -- and
4 the other thing that happens is every time there's dust or
5 they call and there's more violations, they're violations
6 for the same thing, for dirt or debris. We're getting -- we
7 had 20 violations the other day, a lot of which are from
8 people who won't get out of the apartment saying my
9 apartment's a mess.
10 We want to move you out of the apartment so we can
11 finish the apartment. That's what we want to do.
12 THE COURT: When did the Debtor acquire the
13 building, Mr. Rosen?
14 MR. ROSEN: In 2011.
15 THE COURT: And what year is it today?
16 MR. ROSEN: It's 2017.
17 THE COURT: Six years.
18 MR. ROSEN: Well, it was actually -- no, was it
19 2012 -- it was 2012. That's five.
20 THE COURT: Eleven. All the papers say '11.
21 MS. CACUC: I attached the deed.
22 THE COURT: All the papers say '11.
24 THE COURT: Why are we here in 2017 doing this?
25 MR. ROSEN: We're here because --

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1 THE COURT: Why are we here?
2 MR. ROSEN: Because to answer one of the earlier
3 questions about this, Your Honor, because he originally did
4 go -- there's a special funding program that he was in that
5 they held off doing the work while he made the application.
6 It was taking too long, so he decided to self-fund --
7 THE COURT: But I'm going to change the topic,
8 okay. I want to change the topic.
9 MR. ROSEN: You get to change the topic.
10 THE COURT: I want you to explain to me very
11 clearly exactly why this case was filed when it was filed.
12 MR. ROSEN: Fine. This case was filed because the
13 tenants brought an order to show cause that sought to stop
14 all work at the building and he was in the middle of being
15 under a consent decree from HPD and he wanted to do the work
16 including continuing to do the lead paint abatement. If you
17 look at that stipulation --
18 THE COURT: That was why the case was filed?
19 MR. ROSEN: The case was filed because if all the
20 work -- if the work was stopped, he was going to lose his
21 contractors. They're going to walk off the job and he was
22 going to be in contempt and because the two actions were in
23 conflict with one another, HPD was saying A and the tenants
24 were saying doing B, he had to comply with the police power.
25 This we did not view as a police power. We viewed it as an

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1 economic. We looked at the law and we said, you know what,
2 if HPD were to say we want to bring a petition for a 7A
3 Administrator, I wouldn't have filed this case because I
4 read the case law.
5 I looked this and I said, we've got somebody being
6 in a perfect catch 22 who if he -- if that order's put in
7 place, the tenant -- the work is not going to get done.
8 THE COURT: Okay.
9 MR. ROSEN: So we went ahead and we believe that
10 it was a valid exercise to protect the equity in the
11 property --
12 THE COURT: Stop.
13 MR. ROSEN: -- to protect the tenants and the
14 creditors.
15 THE COURT: All right. Stop for a minute. Ms.
16 Schwartz, does that sound like a good faith basis for filing
17 a Chapter 11 in this Court?
18 MS. SCHWARTZ: No, it does not, Your Honor.
19 MR. ROSEN: I think it is, Your Honor. I think it
20 is. It's given the fact --
21 THE COURT: You filed Chapter 11 petition to
22 reorganize. You filed a Chapter 11 petition when you're not
23 paying your debts as they regularly become due. You just,
24 on the record, gave an explanation that has nothing to do
25 with --

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1 MR. ROSEN: Yes, it does, Your Honor. I'm sorry.
2 I'll -- it does because the defaults that would have caused
3 would have destroyed the building.
4 THE COURT: You just said that the reason you
5 filed the case was to stop the tenants from moving forward
6 with their relief. There's not an existing monetary
7 default. There's nothing --
8 MR. ROSEN: But it would have caused a monetary
9 default, Your Honor.
10 THE COURT: That's not why you get to file
11 bankruptcy.
12 MR. ROSEN: No, Your Honor.
13 THE COURT: You don't get to filed bankruptcy to
14 stop someone from litigating. When somebody gets a judgment
15 and they're about to levy on your property and you want time
16 to appeal the judgment, then you file. When somebody gets a
17 judgment and they go to court and they're going to have a
18 foreclosure sale --
19 MR. ROSEN: HPD, Your Honor, HPD --
20 THE COURT: That's when you file.
21 MR. ROSEN: You know, HPD was assessing hundreds
22 of thousands --
23 THE COURT: So what, go to the Housing Court and
24 tell the Housing Court to stop HPD from levying these
25 assessments.

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1 MR. ROSEN: No because we would be in default
2 because of the action being brought by the tenants.
3 THE COURT: So what.
4 MR. ROSEN: If the say was put there, Your Honor.
5 It was clearly an economic --
6 THE COURT: Why is that a reason --
7 MR. ROSEN: -- damage. Hundreds of thousands of
8 dollars are fine.
9 THE COURT: You don't get to file bankruptcy to
10 prevent the occurrence of economic damage. Otherwise,
11 everybody who's in the middle of a trial or who is
12 threatened with a legal proceeding pursuant to which they
13 can be held to a judgment -- a monetary judgment which would
14 hurt their economics would file a bankruptcy. I would be
15 even busier than I already am.
16 MR. ROSEN: Your Honor --
17 THE COURT: Mr. Rosen, you know better.
18 MR. ROSEN: No, Your Honor, on this one, I really
19 don't because of the pendency of the other action and what
20 was going on here, we were going to be -- it was going to
21 cause the default. We had daily accruing penalties that
22 were going to increase -- continue. It wasn't some
23 contingent financial debt out there. There was an HPD
24 action where things were accruing on a daily basis.
25 THE COURT: So what? I literally do not

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1 understand conceivably how that could be an appropriate
2 basis on which to file a Chapter 11 case. You go to the
3 Housing Court and you make your argument on the merits and
4 you convince one or more of the Housing Court judges, please
5 stop this, it's not in the interests of the tenants.
6 In fact, consistent with what's in all of your
7 papers, your position is in no small measure comprised of
8 arguments that the tenants are bringing this on themselves.
9 So you should go to the Housing Court and convince the house
10 court judge to not let that happen. You don't file a
11 bankruptcy in anticipation of suffering some economic
12 downside.
13 MR. ROSEN: Your Honor, it wasn't -- again, I've
14 said my position. Because of the pending HPD act and the
15 damage it was causing -- the economic damage was already
16 caused and we believed that Chapter 11 was appropriate to
17 stop that -- to try and adjudicate it.
18 THE COURT: Tell me what the debts are. What are
19 the debts -- what are the claims?
20 MR. ROSEN: Well, HPD's got a claim right now that
21 they’ve asserted that they said is well over $800,000.
22 MS. CACUCI: But Your Honor, he had just consented
23 that HPD can go forward no matter what, so I don't quite
24 understand this argument.
25 MR. ROSEN: No, no, no. We've consented that the

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1 HPD -- there's not a claim in the case, but --
2 MS. CACUCI: But we consent to HPD.
3 MR. ROSEN: Their enforcement proceedings can go
4 forward. They’re police powers, all right? Whatever
5 happens with the fines, happens with the fines. You're
6 asking me what the debts are.
7 THE COURT: (indiscernible).
8 MR. ROSEN: Okay, $800,000. We've got the debt.
9 We've got potential claims over the lead poisoning with
10 claims over against the contractor that did it; that we
11 don't know what those numbers are. We may have some very
12 large there.
13 THE COURT: You've got claims being asserted
14 against the Debtor?
15 MR. ROSEN: We may. We may. We've had papers
16 filed claiming that there's lead paint damage. If the
17 contractor did it, I assume at some point they're going to
18 come after the Debtor and we're going to have to bring in
19 the contractor that did the work.
20 THE COURT: That's a claim against the contractor.
21 That's not a claim --
22 MR. ROSEN: No, the tenants are going to assert --
23 like I already said, they're going to assert claims --
24 THE COURT: Okay.
25 MR. ROSEN: -- claims against the Debtor. So

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1 there are those claims against the Debtor. They're claiming
2 the Debtor did this. So we have those potential claims
3 which could be very large.
4 Can I go back for one second to what I wanted --
5 where I thought this was going and -- we tried to lay out
6 what the problems were here and I -- from practice I've
7 found to be -- maybe I was right, maybe I was wrong, but
8 thought that you were going to want a solution to this
9 problem. To try and --
10 THE COURT: I do want a solution to this problem.
11 MR. ROSEN: -- okay. To try --
12 THE COURT: Of course, I do. That's why I raised
13 with Mr. Pasquali from the get go the prospect of a Chapter
14 11 Trustee.
15 MR. ROSEN: Can Your Honor -- that's why I raised
16 it in my papers because it would be preferable. I need to
17 talk to my -- I didn't think right now. What I thought is
18 right we now have five vacant apartments that we're
19 finishing up that we can move people in. If this Court and
20 I never intended for you to try this case.
21 My concern was that -- my theory of this case was
22 that the HPD action would go forward. They have the ability
23 to supervise this for the benefit of all tenants in the
24 building. Those represented by this group and those not
25 represented, all right. They're in there daily doing the

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1 enforcement. We would have the jurisdiction through this
2 Court if we need it. Just as we have access problems,
3 because right now, we have no efficient way to get access in
4 the landlord-tenant court. It's an incredibly onerous
5 process. We set that forth.
6 You either have to bring a separate eviction
7 proceeding or move in the supreme court. The Housing Court
8 does not have a jurisdiction to say to a tenant, let them
9 in. All right, we have -- if you go through what we've done
10 there, we have done everything they have asked so far and
11 moving forward. I would like you, I thought the better
12 thing was to do was to treat this --
13 THE COURT: Would you be happy if your family was
14 living in this building, Mr. Rosen?
15 MR. ROSEN: No, but I'd take the offer to move
16 into one of the other apartments. I wouldn't want -- and
17 you now what? If you look at the pictures of some of the
18 renovated apartments, I'd be okay with that. They're pretty
19 nice. They're pretty nice. They're done top to bottom.
20 All right and if you look at the bathrooms when they're
21 done, if you take a look at the pictures, they're not being
22 shabbily. And the problem is, Your Honor, is they lay out -
23 - I know a little bit about -- whenever you build five
24 houses myself, the construction here -- you've got a hundred
25 year old building with water leaking.

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1 THE COURT: I understand that, but that -- but
2 when you -- I think Ms. Cacuci said it best. When you
3 undertake to buy a building, it comes with responsibilities,
4 so that it's a decision to spend your money and make an
5 investment in a hundred year old building.
6 MR. ROSEN: I understand that.
7 THE COURT: And with that goes responsibilities.
8 So it is today, 2017, Debtor has been in possession of the
9 building for five to six years. You put -- you could build
10 a skyscraper in that period of time. For goodness sake --
11 MR. ROSEN: Not with people living in it while
12 you're building it, Your Honor.
13 THE COURT: All right, so then move them out.
14 MR. ROSEN: Well, the problem is when you had to
15 have the space, so as apartments became available, we did
16 that.
17 THE COURT: No, I don't think that's -- but that's
18 a limitation that in my view is made up. There's nothing
19 that says you have to put people in empty apartments in the
20 building. That's why I asked Ms. Rudolph about what the law
21 requires. Find them an apartment in another building.
22 MR. ROSEN: We actually voluntarily did that for
23 one person, Your Honor. People didn't want to leave the
24 building. If you go through those emails, you'll see people
25 refusing to leave for whatever reason. Some people -- one

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1 person left and their two sons stayed. So, we put that
2 person up in another building and --
3 THE COURT: What's the rent role of the building?
4 MR. ROSEN: The rent role is about sixty --
5 $54,000 a month, am I right?
6 DEBTOR: Yeah.
7 MR. ROSEN: It's a little bit less right now
8 because we've got --
9 MAN 1: Yes.
10 MR. ROSEN: -- five vacancies. If they were
11 occupied, it would be about $52, 54,000. There's a -- when
12 we have those apartments, there's about $10,000 positive NOI
13 a month. We gave a detailed analysis of that
14 (indiscernible). So, Your Honor, can I go back to my point
15 on -- for a second on where I think --
16 THE COURT: Go ahead.
17 MR. ROSEN: -- the best way to go on this?
19 MR. ROSEN: So my thinking on this case is I
20 understood that we were -- we would prefer a Chapter 11
21 Operating Trustee before a 7A Administrator, absolutely.
22 All right. And we would continue to fund the repairs on
23 that because through the Operating Trustee, we know we would
24 not have a problem with the money still be coming from the
25 Debtor or (indiscernible) --

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1 THE COURT: Would you support that offer with a
2 commitment letter?
3 MR. ROSEN: I'll have to talk to my --
4 THE COURT: Would you support that letter -- that
5 offer with a commitment letter?
6 DEBTOR: Yes.
7 MR. ROSEN: Is that my client? Well, obviously,
8 I'm trying to talk to him before I do that, Your Honor.
9 THE COURT: You can talk to him.
10 MR. ROSEN: Okay, but Your Honor, but -- let me do
11 the but if I can --
13 MR. ROSEN: -- all right? It seemed to me that
14 the way to do this, we have been moved -- we have 15 people
15 there yesterday. We got those apartments. We have cleared
16 one line. We're on the other one. The only thing stopping
17 us from finishing with the other one is getting access to
18 the ground floor apartment. If we get the ground floor
19 apartment, we can have that other line done quickly and now,
20 we've got the apartments and we can move forward.
21 My suggestion was to keep that Operating Trustee
22 motion as the sort of dam -- over my client's head. Give
23 him a brief period of time without an operating --
24 THE COURT: That's not the proposal from the
25 table.

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1 MR. ROSEN: Okay, but --
2 THE COURT: There's a Housing Court action that's
3 scheduled to go forward tomorrow.
5 THE COURT: You filed this case in order to
6 prevent that from happening.
8 THE COURT: There's no dispute about that. You
9 articulated that as the reason for the filing.
10 MR. ROSEN: Okay.
11 THE COURT: So that's the position that you have
12 staked out.
13 MR. ROSEN: All right.
14 THE COURT: So there's that or there's the Chapter
15 11 Trustee, frankly, today because that's the only bull
16 work, if you will, against the possibility of there being
17 slippage sideways. So one of the things that you said
18 you're concerned about, I have no idea how the rent
19 abatement works and apparently, very smart, experienced
20 people don't know how the rent abatement works.
21 There's nothing that I've heard and I think I saw
22 something in the transcript of the proceeding -- the case
23 that was before Judge Gerber almost 10 years ago, that after
24 a 7A Administrator comes in, 7A Administrator can leave and
25 then that there's nothing that precludes an application for

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1 the rent abatement. And the other thing is that there is --
2 was no commitment whatsoever in any of the papers that, that
3 would be -- that benefit would be -- the extent to which
4 that benefit would be made available to the tenant. So
5 that's purely about the owner preserving --
6 MR. ROSEN: That's in the statute, Your Honor.
7 There's a formula -- I attached the J51 application which
8 has a very complicated formula in it and it specifically
9 says that a portion based on -- gets rebated to the tenant.
10 It's in the rent control law. It's not something we
11 volunteer to do. It's statutory. If you're going to get
12 it, you have to do this.
13 THE COURT: And yours to the benefit of the equity
14 owner. It is for the benefit of the equity owner.
15 MR. ROSEN: But a portion of it gets passed on to
16 the tenant.
18 MR. ROSEN: So --
20 MR. ROSEN: Okay.
21 MS. CACUCI: Your Honor, I have to object because
22 no application has been filed.
23 THE COURT: No, I understand.
24 MS. CACUCI: So it's all --
25 THE COURT: Hypothetical.

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1 MS. CACUCI: Conjecture.
2 THE COURT: It's hypothetical.
3 MR. ROSEN: Well, you have a limited time to do
4 it. I can assure you that we intend to do it, so it's not.
5 I think it's -- has it been submitted?
6 MAN 1: No, we have to finish it.
7 MR. ROSEN: You have to finish what?
8 MAN 1: Well, there is some segments of the work
9 that it could be submitted for. Yes.
10 MR. ROSEN: Okay.
11 MS. CACUCI: Right, they've already for the money
12 is already put in, a person could believe they can -- the
13 $700,000 --
15 MS. CACUCI: -- preventing them from doing that.
16 MR. ROSEN: I don't know the answer to that. I'm
17 not sure that, that's true, Your Honor. All right, Your
18 Honor, I heard you loud and clear. May I have a moment to
19 speak with my client?
20 THE COURT: Sure.
21 MR. ROSEN: Your Honor, may we take five minutes -
22 -
23 THE COURT: Yeah, I think that's a --
24 MR. ROSEN: -- I'd like to speak with the U.S.
25 Trustee as well.

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1 THE COURT: I think that's a good idea. So let's
2 take a little bit more than five minutes. Let's call it 12
3 minutes and we'll come back at 2:30. I do have a conference
4 call I have to take at 3:30 and I hope that we can finish
5 before then.
6 MR. ROSEN: Well, I don't think we -- we'll try
7 and be done with (indiscernible).
8 MS. CACUCI: Your Honor, can I just maybe -- Mr.
9 Rosen can check with the client and clarify for the record,
10 we believe that answer in state court was due long before
11 the filings, so the stay would not have --
12 THE COURT: Well, you --
13 MR. ROSEN: My understanding, no, there was a
14 stipulation there that this answer was due --
15 THE COURT: We'll figure it out.
16 (Recess)
17 THE COURT: Have a seat. All right, thank you
18 everybody for your patience. We have had the benefit of
19 some extensive conversations in chambers and we should go to
20 next -- whatever is next. Mr. Pasquale?
21 MR. PASQUALE: Your Honor, I think just to put on
22 the record is what we have discussed with respect to the
23 motion to abstain and remand and the separate motion to lift
24 stay, to dismiss the case and for sanctions that the Court
25 will carry both of those motions; not decide those today.

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1 THE COURT: Right. Mr. Rosen, understood?
2 MR. ROSEN: Yes.
3 THE COURT: Okay, very good.
4 MR. PASQUALE: In lieu of that, Your Honor and I
5 would ask the Court if it would like us to propose an order
6 that we had discussed and the Court is prepared as we
7 understand it to enter an order for an Operating Trustee, a
8 Chapter 11 Trustee immediately and that, that Trustee would
9 have duties in addition to the normal duties, but the duties
10 of an Article 7A Administrator. Again, Your Honor, we can
11 prepare that order if you would like.
12 THE COURT: Right, with input from Mr. Rosen.
13 MR. ROSEN: But I thought it was not the duties,
14 but the rights. I mean, but we can work that out in the
15 order.
16 THE COURT: I'm sorry. What's the issue?
17 MR. ROSEN: As I understood it and I just -- and
18 we can work it out in the order, it wasn't necessarily the
19 duties of a 7A Administrator, I think it was to have all the
20 rights of a 7A Administrator.
21 THE COURT: What's the difference, Mr. Rosen?
22 MR. ROSEN: Because I think there may be duties of
23 a 7A Administrator that might conflict with an Operating
24 Trustee. I don't know all of them.
25 THE COURT: I can't imagine -- I can't imagine

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1 what those would be. So let's be clear that --
2 MR. ROSEN: I thought it came up with a conflict
3 of -- if the 7A Administrator -- if the Operating Trustee
4 had to get funds from the city. That was the context it
5 came up in that came up and maybe he'd have to --
6 THE COURT: Yes.
7 MR. ROSEN: -- he’d have the right. He clearly
8 has to comply with the AEP order which --
9 THE COURT: Right.
10 MR. ROSEN: -- would be that, but as I sit here, I
11 don't know what other duties a 7A Administrator has in terms
12 of reporting or anything else, so I just thought he was
13 given the rights.
14 THE COURT: Let me put it this way. The Chapter
15 11 Trustee, who will be appointed by the U.S. Trustee,
16 right, this is a two-step process. The order that I enter
17 depending upon when you get it to me either later today or
18 tomorrow, will for good cause shown, direct the appointment
19 of a Chapter 11 Trustee to operate the Debtor. That has the
20 effect of displacing the Debtor and its principals from
21 control and management of the property and everything
22 related to the property. Because the property is in the AEP
23 Program, the Chapter 11 Trustee takes the asset that he's
24 taking control of as is, where is, so to speak, so that he
25 will step into the shoes of the Debtor and continue to

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1 manage and operate the building as is required under
2 applicable state and also, bankruptcy law.
3 One of the duties of a Chapter 11 Trustee under
4 the bankruptcy code is to maximize the value for the benefit
5 of all the creditors and the constituents here because, at
6 least at this juncture, it has been represented to me that
7 there is equity value in the property, then the presumption
8 is at this point that, that Trustee will act in a way that
9 preserves that equity value.
10 We've all discussed at length today the fact that
11 renovations, remediation cost money. There are two sources
12 at least for that funding. I would say there are three. It
13 could come in the form of a continued equity contribution by
14 the principal of the Debtor. It could come in the form of
15 third-party funding from a private source, subject to
16 whatever issues may arise with respect to existing
17 stakeholders and lien holders against the property, or
18 three, as I understand it from the folks who are here on
19 behalf of the tenants and the city, that there is funding
20 available pursuant to various city programs, subject to
21 application therefore, and compliance with all the
22 requirements that go with that funding.
23 So one of the immediate tasks of the Operating
24 Trustee when he or she assumes their position is going to be
25 to immediately begin to investigate any and all sources of

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1 funding. And to the extent that the Operating Trustee gets
2 a number of different offers, they're going to figure out in
3 the exercise of their business judgment what the best one
4 is. So where we started was the difference between duties
5 and rights, I don't think that's a real thing. Ms.
6 Schwartz?
7 MS. SCHWARTZ: Just one friendly amendment to
8 that, Your Honor, when Your Honor was right -- discussing
9 the appointment of the Trustee, I noticed that counsel was
10 feverishly writing down notes, but this would be an
11 appointment with the consent of the Debtor and I didn't
12 understand --
13 THE COURT: I didn't understand that either.
14 MS. SCHWARTZ: Yeah, I didn't --
15 THE COURT: The Debtor has the option to consent,
16 but it's not a condition.
17 MR. ROSEN: My understanding was that you were
18 directing it, Your Honor.
19 THE COURT: I'm directing it.
20 MR. ROSEN: I asked that question.
21 THE COURT: Does it make a difference to you, Ms.
22 Schwartz?
23 MS. SCHWARTZ: It does make a difference --
24 THE COURT: Why is that?
25 MS. SCHWARTZ: -- Your Honor, because if Your

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1 Honor is finding it for good cause shown, Your Honor hasn't
2 had an evidentiary hearing and we want to make sure that
3 there wouldn't be any appeal of the Court's order --
4 THE COURT: Okay.
5 MS. SCHWARTZ: -- so that's why I understood it to
6 be with the consent of the Debtor.
7 MS. CACUCI: The Debtor suggested it.
8 MR. ROSEN: I suggested it, Your Honor. I just
9 had a discussion with my client and told him that the Court
10 was ordering it because we had -- as you know, we had
11 requested a bunch of other things.
12 THE COURT: Mr. Rosen, let's just cut to the
13 chase. You have parties who appear here that have appellate
14 rights. You have due process rights. I need to know
15 whether or not if I enter an order directing the appointment
16 of a Chapter 11 Trustee, you plan to take an appeal.
17 MR. ROSEN: As of right now, Your Honor --
18 THE COURT: No, as of right now is not a good
19 enough answer.
20 MR. ROSEN: No, I --
21 THE COURT: I need a yes or a no.
22 MR. ROSEN: May I talk --
23 THE COURT: Because if the answer is that I need
24 to make an evidentiary record, then we'll take a break and
25 we'll get started.

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1 MR. ROSEN: Let me talk to my client. One second.
2 THE COURT: Okay.
3 MR. ROSEN: We have no intentions of appealing it,
4 Your Honor.
5 MR. PASQUALE: So then I will include in the order
6 onset, that'll resolve --
7 MR. ROSEN: Well --
8 MR. PASQUALE: -- that issue.
9 THE COURT: What are we doing --
10 MR. ROSEN: What?
11 THE COURT: -- here, Mr. Rosen? If you don't want
12 it to be on consent, then I need an -- a representation not
13 that there's no intent but that there will be no appeal.
14 MR. ROSEN: No, there will be no appeal, Your
15 Honor. When I say intent, I'm not equivocating with you; it
16 was just a manner of speak.
17 THE COURT: So we were waiving those rights?
18 MR. ROSEN: We will not appeal. We were -- we're
19 waiving our rights to appeal this order.
20 THE COURT: All right. That's very clear.
21 MR. PASQUALE: Then we will prepare the order and
22 submit --
23 THE COURT: Okay.
24 MR. PASQUALE: -- on notice to Mr. Rosen.
25 THE COURT: All right. So just --

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1 MR. ROSEN: I'd like to -- I want to see the
2 questions.
3 MR. PASQUALE: Yes, what I --
4 THE COURT: Yes, of course. The usual procedure
5 will follow. You'll draft an order, you'll share it with
6 Mr. Rosen, you'll share it with all --
7 MR. PASQUALE: Of course.
8 THE COURT: -- counsel who have appeared here
9 today, you'll submit it to my Chambers with a representation
10 that everyone agrees and then for the benefit of those other
11 folks in the courtroom, the process that ensues is that in
12 fact, I've asked Ms. Schwartz not even to wait for the order
13 to appear on the docket. She is going to begin to engage in
14 communication with the various parties to take their
15 suggestions with respect to who should fill the role, that's
16 what happens in every case in which a Chapter 11 Trustee is
17 directed to the appointment.
18 The U.S. Trustee will then take all of those
19 letters and suggestions into consideration and with regard
20 to the statements that had been made, that certain emergency
21 conditions exist; we'll work with all deliberate speed to
22 make an appointment.
23 The individual will then be identified in a notice
24 that gets filed on the docket of the case indicating that
25 the U.S. Trustee has appointed X or Y person to assume the

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1 role and then that person will swing into action
2 immediately.
3 Mr. Rosen, you know, and I know you know, but I'm
4 just saying it for the benefit of those who haven't been in
5 this situation before, that the Debtor in all respects and
6 the Debtor's principal, is expected to cooperate in every
7 respect in order to get the individual up to speed. And to
8 the extent that rents are due and are paid, as they should
9 be, that the -- one of the first things that the operating
10 Trustee also will be to understand the accounts and take
11 control of the operating the accounts of the building.
12 But there is obviously, a very long history here.
13 We have not had an evidentiary hearing. There are always
14 two sides of the story and the operating Trustee certainly
15 will, I expect, listen to everybody and try to come up with
16 the best path forward, spending hopefully the least amount
17 of money in order to get this building repaired and,
18 frankly, get out of Chapter 11, either pursuant to a plan or
19 because the case is dismissed.
20 And even though the Debtor will be divested of the
21 day-to-day control of the property, Debtor remains a party
22 in interest in the case, the Debtor's principal remains a
23 party in interest in case, the tenants, the city all remain
24 parties in interest in the case under Section 1109 of the
25 code and you have a right to be heard and I will hear you.

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1 MR. ROSEN: Thank you, Your Honor.
2 MR. PASQUALE: Thank you, Your Honor.
3 THE COURT: All right. Thank you very much.
4 MS. SCHWARTZ: Thank you, Your Honor.
5 THE COURT: Folks, if I could ask you to -- Ms.
6 Schwartz, if you need to leave that's fine, but because of
7 the -- because I have folks in the courtroom who are not
8 lawyers who are tenants and parties in interest, before we
9 leave, there's a lot of technical stuff that we've talked
10 about. We've been here a long time, and I just want to give
11 folks, even though you're represented by the counsel, the
12 opportunity to ask any questions or voice any concerns that
13 you have.
14 Come on up. I -- just come up so that we can get
15 your name and speak into the microphone so that it can be
16 recorded. Everything in the courtroom is recorded.
17 (MS. DEMALDINADO?): Thank you, Your Honor.
18 THE COURT: Come on up. Come up to the podium
19 here. Give me your name, please.
20 MS. MALDONADO: My name is (indiscernible)
21 Maldonado.
22 THE COURT: Okay.
23 MS. MALDONADO: I just truly want to take the time
24 to thank you for listening to us --
25 THE COURT: Sure.

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1 MS. MALDONADO: -- and making our voices be heard
2 now. It means a lot to me for us to be here to fight,
3 because we been fighting with Mr. Miller for --
4 THE COURT: Okay.
5 MS. MALDONADO: -- many years. Him and myself
6 know that I, myself, personally, try to work with him.
7 THE COURT: Okay.
8 MS. MALDONADO: So this is not something that we
9 do maliciously. We just wanted our services, because 90
10 percent of us tenants in that building, we're working
11 people. And all we wanted from him was our services and the
12 respect that we deserve. That's all we wanted.
13 THE COURT: Okay.
14 MS. MALDONADO: Okay. Thank you, Your Honor, for
15 listening to us.
16 THE COURT: You're very welcome. I'm just -- I
17 view what I'm doing as my job.
18 MS. MALDONADO: Yeah.
19 THE COURT: And I'm just trying to do my job the
20 best way that I know how.
21 MS. MALDONADO: And I -- believe me, Your Honor,
22 just by listening to you today in the hearing, the outcome,
23 I understand that because I took the lead role of being the
24 tenant patrol president just so we can all work together.
25 You know, it was a big role, but it -- I see things being

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1 done.
2 THE COURT: Okay. But you should understand that
3 --
4 MS. MALDONADO: Mm hmm.
5 THE COURT: -- it may seem like I have a magic
6 wand --
7 MS. MALDONADO: No, I know.
8 THE COURT: -- but I don't.
9 MS. MALDONADO: I know.
10 THE COURT: I don't have a magic wand, and I often
11 say that if I had a money press in the back, I would just
12 print off money. But I don’t have that either. So you
13 should have appropriate expectations. Hopefully, things are
14 going to start to move. One of the advantages for the
15 tenants and also for Mr. Miller is, we're going to be moving
16 forward instead of continuing to fight, so folks get to save
17 money that they would otherwise spend on lawyers and the
18 already overburdened Housing Court can have one fewer thing
19 to do. And if things go as I hope and expect they will it
20 should take very little of this Court's time, as well. But
21 you will have the ability -- all of you will have the
22 ability to continue to speak your minds and hopefully we
23 can, you know --
24 MS. MALDONADO: Move forward. That's why I think
25 on behalf --

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1 THE COURT: -- move forward.
2 MS. MALDONADO: -- of all my tenants are here,
3 supported this, I want to thank you just for just letting us
4 -- just hearing us -- just -- even though I know it was a
5 quick thing, and I'm glad it was -- it just happened.
6 THE COURT: Okay.
7 MS. MALDONADO: All right, thank you so much.
8 THE COURT: You're very welcome. Does anyone have
9 any questions?
10 MS. CACUCI: Any questions, or should -- you guys
11 can ask me, too.
12 THE COURT: So one of the questions that counsel
13 asked, and I'll confirm it with Mr. Rosen on the record, is
14 a question of access. So that as soon as the Trustee comes
15 in, that he will be the one following the procedures to ask
16 for access to the building. He will have access to the
17 building, but in terms of access to the particular
18 apartments, he will go through the appropriate procedures to
19 ask you for access, and Mr. Miller understands that he will
20 no longer have the right to access.
21 Now, he has a big role to play here because he's
22 the owner of the building and because he knows a lot about
23 the history of the renovations and he knows a lot about --
24 how can I say it? You know, the ins and outs of certain
25 physical things in the building, and the new Trustee is

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1 going want to take advantage of that knowledge that he has.
2 So Mr. Miller may in fact be going to the building with the
3 new Trustee. So I expect that you'll treat him with
4 respect, he's -- will treat you with respect and
5 everything's just going to move forward in an orderly
6 fashion.
7 MS. MALDONADO: Can I say one more thing, Your
8 Honor?
9 THE COURT: Sure.
10 MS. MALDONADO: Okay. Your Honor, one thing I can
11 guarantee you -- and Mr. Miller knows this well -- when it
12 comes to any of the tenants and any help in the apartments
13 or getting in, that would not be a problem for me or none of
14 tenants, and I expect that from all of them. You'll
15 definitely have our support there with that. As long as we
16 get the right things that are supposed to be done. The
17 legal way is not the illegal way. I will not be part of
18 this moment on.
19 THE COURT: Okay.
20 MR. ROSEN: I guarantee you that, Your Honor.
21 THE COURT: Okay.
22 MR. ROSEN: And, Your Honor, I just want --
23 THE COURT: Yeah.
24 MR. ROSEN: I just want everyone to be clear, also
25 -- this is Avrum Rosen, for the record -- that until the --

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1 you know, we are still under the HPD order and there are
2 people that are --
3 THE COURT: Yes.
4 MR. ROSEN: -- working there today and will be
5 tomorrow, and that work is still going to be going forward,
6 and we ask that people cooperate with it, so it's not like
7 anything stopped when the operating Trustee is appointed.
8 It will probably take him a few days to get up --
9 THE COURT: Right.
10 MR. ROSEN: -- to speed, also, so --
11 THE COURT: Right. We shouldn't lose -- every day
12 is precious, and --
13 MR. ROSEN: Thank you.
14 THE COURT: -- we shouldn't lose that and we
15 shouldn't have, you know, any folks walking off the job or
16 any other interruptions. You know, we don't know, you know,
17 what the weather, we could have a storm. Let's just keep --
18 we're just going to keep on going. All right?
19 MS. MALDONADO: Thank you, Your Honor.
20 MR. ROSEN: Thank you very much, Your Honor.
21 MS. CACUCI: Thank you, Your Honor.
22
23 (Whereupon these proceedings were concluded at 4:17 PM)
24
25

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1 C E R T I F I C A T I O N
3 I, Sonya Ledanski Hyde, certified that the foregoing
4 transcript is a true and accurate record of the proceedings.
5 Digitally signed by Sonya Ledanski
6
Sonya Hyde
DN: cn=Sonya Ledanski Hyde,
o=Veritext, ou,
7
Ledanski Hyde email=digital@veritext.com, c=US
Date: 2017.02.27 15:16:48 -05'00'
8 Sonya Ledanski Hyde
10
11
12
13
14
15
16
17
18
19
20 Veritext Legal Solutions
21 330 Old Country Road
22 Suite 300
23 Mineola, NY 11501
24
25 Date: February 27, 2017

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919 Prospect Transcript of Hearing - January 25, 2017

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16-13569-scc Doc 52 Filed 03/16/17 Entered 03/16/17 12:43:16 Main Document

1 UNITED STATES BANKRUPTCY COURT

2 SOUTHERN DISTRICT OF NEW YORK

3 Case No. 16-13569-scc

4 Adv. Case No. 17-01009-scc

6 In the Matter of:

8 919 PROSPECT AVE LLC,

14 919 PROSPECT AVE.,

18 U.S. Bankruptcy Court

19 One Bowling Green

20 New York, NY 10004

22 January 25, 2017

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2 HON SHELLEY C. CHAPMAN

3 U.S. BANKRUPTCY JUDGE

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1 Hearing re: 16-13569-scc Doc #20 Order to Show Cause

2 Shortening Notice and Scheduling Hearing to Consider the

3 Tenant-Petitioners Emergency Motion for an Order (I)

4 Granting Relief from the Automatic Stay and (II) Dismissing

5 the Chapter 11 Case and Imposing Sanctions.

7 Hearing re: 16-13569-scc Order to Show Cause

9 Hearing re: 17-01009-scc Doc #5 Order to Show Cause

10 Shortening Notice and Scheduling Hearing to Consider the

11 Tenant-Petitioners’ Emergency Motion for Abstention and

25 Transcribed by: Sonya Ledanski Hyde

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3 ROSEN, KANTROW & DILLON, PLLC

4 Attorney for the Debtor

8 BY: AVRUM J. ROSEN

10 STROOCK & STROOCK & LAVAN LLP

11 Attorney for the Movants / Tenants

12 180 Maiden Lane

13 New York, NY 10038

15 BY: KENNETH PASQUALE

17 UNITED STATES DEPARTMENT OF JUSTICE

18 Attorney for the U.S. Trustee

19 201 Varick Street, Room 1006

20 New York, NY 10014

22 BY: ANDREA B. SCHWARTZ

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1 NYC DEPARTMENT OF HOUSING PRESERVATION & DEVELOPMENT

3 100 Gold Street, Room 6-02

4 New York, NY 10038

9 URBAN JUSTICE CENTER

11 123 William Street, 16th Floor

12 New York, NY 10038

14 BY: STEPHANIE RUDOLPH

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2 THE COURT: Thank you, please have a seat. Could

3 I have appearances, please?

4 MR. PASQUALE: Good afternoon, Your Honor.

6 tenant movants. With me is my co-counsel, Stephanie

7 Rudolph, from the Urban Justice Center. You've granted her

8 pro hac application.

9 THE COURT: Very good. Ms. Cacuci, how are you?

10 MS. CACUCI: Good. How are you, Judge?

11 THE COURT: Okay.

12 MS. CACUCI: And with me is Ms. An from HPD, an

14 THE COURT: Okay. Very good. Mr. Rosen, how are

16 MR. ROSEN: Good afternoon, Your Honor. Avrum

17 Rosen of the firm of Rosen, Kantrow & Dillon representing

19 THE COURT: Okay. Ms. Schwartz, good afternoon.

20 MS. SCHWARTZ: Good afternoon, Your Honor. Andrea