Bank seeks to nullify Christensen’s bankruptcy

Sterling Savings Bank has asked the U.S. Bankruptcy Court to deny bankruptcy protection to one of developer Gary Christensen’s companies.

Christensen Realty Investment II, which Christensen founded to renovate the Gem & Noble Building in downtown Boise, declared bankruptcy on Feb. 6. Sterling Savings was about to foreclose on its $2.65 million loan to Christensen Realty and put the Gem & Noble Building at 10th and Main up for auction on Feb. 7.

Sterling Savings asked the court to lift the bankruptcy protections that prevent the bank from completing the foreclosure and selling the property.

Christensen Realty has $3.8 million in liabilities and $3.5 million in assets, according to the company’s monthly operating report.

Christensen Realty will probably not be able to finish the building because it already owes more to Sterling and to contractors and subcontractors than the property is worth, according to Sterling’s motion.

The company would need more than $1 million in additional funds to finish the condo renovation project, Sterling wrote. If Christensen Realty managed to get new financing and finish the project, total expenditures on Gem & Noble would total $6.3 million, while the projected value of the finished building is just $4.5 million, according to Sterling. That makes it unlikely lenders would finance the project.

It would make more sense for Sterling to sell the property and Christensen Realty to reorganize without it, according to the motion.

Christensen Realty objected to the motion, claiming that the project would be worth more than $5 million once it was complete, more than enough to cover debts. And the property is necessary to a successful reorganization plan, according to documents filed by Christensen Realty.

The Gem & Noble Building was one of two century-old downtown Boise buildings that Gary Christensen was simultaneously trying to renovate into condos. The other project is the R. Grey Lofts at Eighth and Myrtle, it, too, has run into financial difficulties. Subcontractors filed liens. General contractor McAlvain Construction sued Christensen for breach of contract and to foreclose on its lien. And the lender – in this case, Bank of the Cascades – began foreclosure proceedings.

Bank of the Cascades has scheduled a sale for the property on April 10. Loft Living Condominiums, Christensen’s development entity for the R. Grey Lofts, has not yet filed for bankruptcy. The company owes Bank of the Cascades $5.4 million.