Bankruptcy dealings: World Class affiliate won't close $95M auction bid – Austin Business Journal – The Business Journals
Another prime Austin site owned by Nate Paul’s World Class Holdings is on the verge of being purchased out of bankruptcy — provided a nondescript shell company comes up with $134.2 million to close the deal.
A World Class-affiliated holding company called Rising Tiding Investments LLC had earlier this month won the bankruptcy auction for a six-acre site on South Congress Avenue with a bid of $95.1 million.
But Rising Tide has “declined to close its court-approved bid” to purchase the real estate — home to offices, dive bar Ego’s and apartments — according to an Aug. 30 bankruptcy court filing.
With a bid of $95 million, a company called NIA ATX LLC is next in line to close on the property.
The site is owned by a World Class entity called WC South Congress Square LLC and is considered a prime redevelopment site across Lady Bird Lake from downtown.
Rising Tide has twice won bankruptcy auctions for World Class properties only to decline to close the transactions.
Earlier this month, Rising Tide informed the Chapter 7 trustee overseeing the liquidation of property at 309 E. Third St. — owned by a World Class entity called WC 3rd and Trinity LP — that it would not proceed with its $39.3 million bid. That building is home to Brazilian steakhouse Fogo de Chão.
NIA ATX is also the backup bidder for the 3rd and Trinity site, with a bid a $39.2 million.
The decisions not to close on these deals add another layer of the intrigue to the strategy of embattled real estate investment firm World Class, which has been using the proceeds of the $588 million bankruptcy sale of Great Value Storage to buy some properties back out of bankruptcy. World Class was once seen as a rising star in Austin’s commercial real estate world but has been under increasing pressure in recent years as lawsuits, bankruptcy filings and foreclosures have piled up.
As a result, some of its assets have been picked over by competitors, including the 156-acre former 3M campus in Northwest Austin that Karlin Real Estate LLC now intends to redevelop.
Paul did not immediately respond to a request for comment for this story.
It’s unclear whether NIA ATX intends to close on either purchase, but the shell company now appears to be in the driver’s seat to acquire both the 3rd and Trinity and WC South Congress Square sites for a combined $134.2 million.
The firm is a bit of a mystery, and whether it has the financial wherewithal to pull off both deals remains to be seen. Travis County records show it has recently released liens attached to World Class properties purchased out of bankruptcy by Rising Tide. Drew Dennett is listed as manager of the company but attempts to contact him have been unsuccessful.
The company’s attorney, Trey White of Villa & White LLP, did not immediately respond to a request for comment. The attorney representing World Class’ WC South Congress Square, Mark Ralston of Fishman Jackson Ronquillo PLLC, also could not be reached for comment.
Jay Ong of Munsch Hardt Kopf & Harr PC, who is representing the Chapter 7 trustee in the WC South Congress Square case, on Aug. 31 declined comment other than to say there are “potential disputes relating to the administration of the final sale order.”
An Aug. 1 sale order in the WC South Congress Square case indicates that both Rising Tide and NIA ATX were required to increase their earnest money deposits to “a total of $1 million” within three days of the order.
It’s unclear whether the bidders submitted those deposits. But the order suggests the Chapter 7 trustee would keep $500,000 of Rising Tide’s earnest money deposit if the deal didn’t close by Aug. 29.
Then, if NIA ATX doesn’t close within 30 days, the trustee is to retain another $500,000 from that entity’s earnest money deposit.