A U.S. Bankruptcy Court judge decided Monday evening to allow trustees to begin the process of closing down and mothballing the Statler Towers.
The decision by Bankruptcy Court Judge Carl Bucki had been anticipated, especially since the prospective buyers had stopped carrying-cost payments earlier this month and the building's anchor tenant, Park Lane Catering, has allegedly not paid $34,000 in rent.
Bucki, after hearing more than 90 minutes of arguments, agreed with the court-appointed trustee, Amherst attorney Morris Horwitz, and his special counsel, Garry Graber, that it is time to start the mothballing process at the downtown Buffalo landmark.
The building is faced with a dwindling number of tenants, its insurance coverage that may expire by Jan. 10, and it has approximately $25,000 remaining of a $45,760 deposit that was made with National Fuel Gas Distribution Co. Including payroll and utility costs, plus other related expenses, it costs more than $20,000 a week to keep the building open.
"It has to be closed," Horwitz said. "It costs too much on a weekly basis to keep it open. We are not going to burn through $500,000 just for a handful of tenants."
The Statler has been under the protection of a Chapter 11 involuntary bankruptcy process since mid-April. The building was auctioned on Aug. 12 to New Buffalo Statler Redevelopment LLC, a local investment group, which bid $1.3 million for the building, but still owes $800,000 in three-times-delayed closing costs.
Horwitz and Graber placed New Buffalo Statler Redevelopment in default after the group failed to meet a court-ordered Nov. 30 closing date.
"For the sake of the city, we all wanted this to work out," Bucki said. "I firmly hoped this would be a successful enterprises, but there comes a time when you have to realistic."
Bucki set a final hearing on the Statler's closing, along with a status conference with the pool of attorneys connected with the case, for Jan. 12. The building will likely be completely closed and shuttered by late January.
"Where we go from there, I hope we have answers on Jan. 12," Bucki said.
Even with a closing in its immediate future, the Statler will remain open long enough for Park Lane Catering to handle several large events, including a New Year's Eve wedding, the "Ice Ball" on the same night, and a Jan. 9 wedding.
During Monday's hearing, Bucki heard from Buffalo attorney Gabriel Ferber, whose son and future daughter-in-law have reserved the Jan. 9 wedding date.
"Tina (Ferber's future daughter-in-law) has her heart set on this romantic location," Ferber said. "We tried to persuade her. We've been holding our breath as we read the paper."
Bucki did allow Horwitz and Graber to use slightly more than $98,000 of the $500,000 that sits in New Buffalo Statler Redevelopment's escrow account to pay back wages owed, since mid-December, to the building's nine employees, and to begin the winterization -- or mothballing -- process that includes shutting down the building's water pipes and heating system in an orderly fashion.
The building's 14 remaining tenants have started the process of finding new office space. All were notified on Dec. 16 by Horwitz of the possible closing of the 18-story, 86-year-old structure.
Horwitz hasn't closed the door on the building being sold. New Buffalo Statler Redevelopment continues to pursue possible investors, and others have expressed some interest.
"There's a very real possibility an offer may made," Horwitz said. "It's anyone's building at this point."
Any potential buyer would need to make an offer that includes paying the nearly $300,000 owed in back city, Erie County and water district taxes.
"We'd look at any reasonable offer that goes over the taxes and closing costs," Horwitz said.
Any final offer would need Bucki's approval.
