Pillsbury Helps Achieve Precedent-Setting Win for Affordable Housing Nonprofit in Boston

Following a federal bankruptcy judge’s ruling that the nonprofit Codman Square Neighborhood Development Corporation (CSNDC) is permitted to buy two properties from a bankrupt landlord, 59 homes will now be preserved by for affordable housing. Earlier this year, court actions were initiated against the properties’ owner, who filed for chapter 11 bankruptcy in 2013, to address health and safety violations. The trustee appointed to administer the bankruptcy case filed a motion in July 2016 to abandon one of the properties, essentially allowing the mortgage holder to foreclose on it.

In early August, CSNDC began discussions with the trustee to acquire both properties and preserve them as affordable housing. The tenants, along with the Boston Public Health Commission, held claims against the bankruptcy estate in excess of $3,500,000 but agreed to waive their claims if the properties were sold to a nonprofit such as CSNDC and maintained as affordable housing. In early October, the trustee conducted a sealed bid auction in bankruptcy court and determined that CSNDC’s bid was the highest and best offer, due in large part to the claim waivers.

“It was important to the tenants that these apartments be preserved as affordable housing. By waiving their claims, they were able to improve the economies of the CSNDC bid and achieve this great result,” said Insolvency & Restructuring partner Christopher Mirick who, along with partner Andrew Troop and associates Matthew Oliver and Dina Yavich, represented the tenants and put together the coalition and strategy to successfully acquire the properties.

Gail Latimore, Executive Director of the CSNDC added: “The process of working with the coalition – the attorneys, the city of Boston, our funding partners, City Life/Vida Urbana and the tenants of the Waldeck and Orlando St. properties – represents the personification of CSNDC’s mission of building a cohesive and resilient community in South Dorchester and developing affordable housing that is safe and sustainable and that promotes economic stability for low- and moderate-income residents.”