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Dispute over Uptown Business Center in SoBro gets messier

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A months-long court feud over a retail building at the southwest corner of 49th Street and College Avenue has become even more heated now that the owner has sought bankruptcy in an attempt to delay foreclosure on the structure.

The dispute started in October when the lender tried to take possession of the Uptown Business Center, whose owner, Leif Hinterberger and his partners, owed $802,500 under the defaulted mortgage, according to the suit filed in Marion Superior Court.

uptown business center 15colUptown Business Center's tenants include the Upland Brewery tasting room and The Paw Patch Veterinary Hospital. (IBJ Photo/Scott Olson)

But late last month the fight over ownership spilled into federal court when Hinterberger filed to reorganize the assets of Uptown Business Center LLC under the protection of Chapter 11 bankruptcy.

In the filing, Hinterberger lists owner assets of nearly $1.4 million, or the assessed value of the building whose tenants include the Upland Brewery tasting room and The Paw Patch Veterinary Hospital.

Liabilities total about $1.1 million, the bulk of which is a $761,917 mortgage to Alpha Capital LLC. The bankruptcy filing also names Arturo DeRosa, Donald C. Arbogast Jr., Dan Fortune and Steve LaCross, who hold second mortgages on the property.

Locally based Alpha Capital bought the original mortgage on the building from Minnesota-based PSB Credit Services Inc. about the time foreclosure proceedings began, according to court documents.

Hinterberger says he’s willing to pay the debt but argues that PSB Credit Services is still the rightful owner of the mortgage, not Alpha Capital. He expects the bankruptcy proceeding to clarify the ownership issue.

Hinterberger specifically accuses Bryan Chandler, a principal of Alpha Capital, and his partners of trying to undermine his attempt to resolve the debt and instead take possession of the business center.

“We believe there have been attempts to hide their true motives, manipulate the legal process and take our properties, our assets, and our long-term community and economic investments,” Hinterberger said in an e-mail.

Chandler, a local real estate investor, did not return phone calls seeking comment. But he and Hinterberger have crossed paths before.

Hinterberger in 2011 lost control of six properties across the street from the Uptown Business Center on the northwest corner of the intersection of 49th and College, where he had hoped to build a $19 million mixed-use project called The Uptown.

The properties on the northwest corner are now controlled by locally based Strategic Mortgage Funding, a company operated by Chandler that invests in distressed mortgages.

A lawyer for Alpha Capital dismissed Hinterberger’s July 29 bankruptcy filing as a last-ditch effort to stall foreclosure on his Uptown Business Center.

“It’s our belief that it was put in place to delay procedures,” said Amy VonDielingen, a partner at Wooden & McLaughlin LLP.

A court document filed by Alpha Capital supporting its attempt to foreclose says Alpha has made concessions in an attempt to resolve the matter without taking possession of the property.

Alpha said that it agreed to delay foreclosure for three months provided that Hinterberger and his partners made payments in December and January of $2,500 per month. Alpha also agreed to accept $550,000 to settle the mortgage default, an amount nearly $250,000 less than what is owed on the unpaid principal, according to court documents.

“The forbearance agreement gave defendants exactly what they claimed they wanted—time to pay off the loan,” lawyers for Alpha wrote in a July court motion. “Despite the plain and unambiguous terms, defendants now challenge Alpha’s right to enforce the note and mortgage. But defendants cannot put the toothpaste back in the tube.”

In a phone interview, Hinterberger’s lawyer, Rob Cheeseborough, repeated their stance.

“My client wants to pay every dollar to the ultimate holder of that note, not [to] the alleged holder,” Cheeseborough said. “The [chapter] 11 will make it so he pays the appropriate party.”

Court documents show that Hinterberger bought the building in 2005 for $250,000 and so far has spent $1.2 million on renovations.
 

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  • Chandler
    Shame on Chandler and his family of cronies for their avarice!!
  • Predatory Wrongful Foreclosure
    “The UpTown project team continues to work towards a solution that will enable us to implement this catalytic corridor project while providing an appropriate return to our investors and legitimate lenders. Our efforts to resolve these financial matters have been consistently undermined by a group of people affiliated with one specific "lender", Bryan Chandler. As this group of people work to “Insure” our failure, it affects us and our City in many ways. We believe there have been attempts to hide their true motives, manipulate the legal process, our communities development, and take our properties, our assets, and our long term community and economic investments. These actions compound many City wide problems and set the conditions for a few people to reap outsized financial returns. We are working with legal and financial advisors to ensure that our investors and lenders, both direct and indirect/unregulated lenders are reasonably compensated for their financial contributions to the project and finally enable “The UpTown” economic and community development project to move forward. For this to happen there needs to be a settlement which ensures our community’s sustainable solutions are not undermined by these unregulated lenders’ and their affiliates’ greed. Otherwise we believe with further investigation we will be able to expose the simple facts: who, what, and how this group is affiliated; and how they are doing what they are doing. We will be happy to comment more after we assemble additional information from our legal and financial advisors who we are working with to resolve these matters.” UpTown Business Center Managing Member Leif Hinterberger
  • Not surprised
    Hinterberger has had delusions of grandeur for a long time. His inability to work within the realm of reality makes what is now happening almost a certainty. I do admire his "vision" but his entitlement attitude makes him feel he is owed the means to complete that vision by some other entity.Too bad.
  • cheers
    If a building had a personality, it would learn to tap dance. Absent that, the courts are pretty good at sorting out the legal end. It's too bad nothing is going to get built down there for a while, but so it goes.
  • more
    Jerry's comment is on the mark. Without resorting to slander: neither guy has a reputation for playing well with others.
  • Chandler
    Jerry, what is it that makes it easy to cheer for the other guy when Bryan Chandler is at the table? Guy kinda flies under the radar, probably on purpose if he capitalizes on other people's troubles, but his name pops up occasionally in IBJ & commercial real estate deals. Not an omen of good fortune for other party, usually?
  • Chandler
    It's hard to cheer for Leif Hinterberger until you find out that Bryan Chandler is on the other side.
  • ...
    Que a Leif Hinterberger rant in 3...2...1...
  • My money's on the bankers
    1. Guy borrows money. 2. Guy fails to make payments. 3. Guy loses building. Somebody needs to 'splain to guy that the reason the banks have all the money is that they have the best lawyers. It will be fun to watch, but I already know who's going to win.

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    1. I think the poster was being sarcastic and only posting or making fun of what is usually posted on here about anything being built in BR or d'town for that matter.

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