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Business Observer Friday, Nov. 5, 2021 9 months ago

Money grab for past due rent almost derailed sale of shuttered mall

As lawyers waited for final order approving the sale of the now-closed DeSoto Square Mall, the former owner's lawyer tried to collect back rent

The sale of DeSoto Square Mall in Bradenton was nearly derailed because of a dispute between Hudson’s Furniture and DeSoto Owners LLC over back rent.

The problem arose after a bankruptcy auction was completed and won by Rompsen US Master Mortgage, the lender, which paid $20 million for the shuttered mall. The sales agreement called for the new owners to assume Hudson’s lease. A hearing was scheduled to approve the sale Oct. 20 and the motion was granted by U.S. Bankruptcy Judge Jil Mazer-Marino at that time.

But before Mazer-Marino could sign the order making the sale official, lawyers for DeSoto Owners, which had owned the mall, asked her in a letter to insert a paragraph saying, in part, that the sale does not “cut off” its rights to collect on back percentage rate sales rent.

DeSoto Owners' lawyer, Isaac Nutovic, didn't write exactly how much he believes is owed but “that substantial six figure amounts are potentially due from Hudson’s.”

Hudson’s, in its own letter to the judge, blasted DeSoto, accusing it of a money grab.

According to the letter from Hudson’s lawyer, R. Scott Shuker, after the Oct. 20 hearing everyone entered the weekend expecting the sales order to be uploaded to the federal court’s online system by Monday Oct. 25. (Nutovic told the Business Observer in an email Friday Oct. 22 that “the sale was approved.”)

Shuker wrote that the order didn’t appear but “to the surprise and objection of Hudson’s and Rompsen at 1:30 pm on October 25, 2021, counsel for the debtor attempted to strong arm Hudson’s into paying money by seeking to add language to the sale order.”

“In addition to being a provision that has never before been discussed and which was raised AFTER debtor’s counsel agreed to the form of sale order, the notion that the lease can be fully assigned to (the) purchaser yet the estate retains some right to bring an enforcement action as to the lease is absurd.”

A conference on the matter was held Oct. 26. Later that day the final order signed by Mazer-Marino — sans DeSoto Owner’s paragraph — appeared in the court’s online system.

DeSoto Square, on 57.86 acres in Bradenton, closed in April after years of decline.

According to court papers, DeSoto Owners bought the mall March 17, 2017 for $25.5 million. A judgement of foreclosure for $29.3 million was issued Jan. 20, 2020 and a foreclosure sale was scheduled for Sept. 23, 2020. DeSoto Owner filed for Chapter 11 bankruptcy the day before the sale.

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