CINCINNATI — The court-appointed receiver for dozens of Cincinnati apartment properties wants to find new owners for those troubled properties as quickly as possible.
It’s the latest development in a complicated foreclosure case involving Vision & Beyond, a real estate company that collapsed this year after a series of foreclosure cases led to civil fraud allegations and criminal charges against the company’s founder.
Hamilton County Judge Christian Jenkins held a status hearing on five Vision & Beyond foreclosure cases Thursday, calling the sale of roughly 70 disputed properties “an obvious path” forward.
“They’re never going to be worth more than they are today,” said Zach Prendergast, attorney for Prodigy Properties LLC, which has managed about 600 Vision & Beyond apartment units since February. “It’d be better if the receiver could sell properties and create a fund the parties can litigate over.”
Prendergast said a quick sale would put new owners in charge of properties like the 116-unit Kirby Avenue Apartments complex in Mt. Airy, where a failing sewer system has caused raw sewage to flow into tenants’ apartments and a nearby creek.
While the judge didn’t make any rulings on Prodigy’s request, he told attorneys representing lenders and investors that he would consider a court-ordered liquidation at a May 14 hearing.
“The court’s here to decide disputes,” Jenkins said. “The court’s not here to be a property manager.”
WATCH: Judge will consider a liquidation order for Vision & Beyond properties
A liquidation order could bring faster relief to tenants struggling with maintenance issues at Vision & Beyond properties, including sporadic garbage collection, utility service, mold and leaky roofs. But that would partly depend on who the buyer is and whether the properties are brought up to code before they are sold.
“We need the court to approve loans and funds to the receivers so that they can go in and make these repairs. That’s the main pending motion that would affect the tenants right now,” said Niara Kitt-White, staff attorney for the Legal Aid Society of Greater Cincinnati.
Legal Aid filed emergency motions to intervene in the case on behalf of resident associations at Kirby Avenue Apartments and Coachwood Apartments in Westwood. Kirby is managed by Prodigy Properties. Coachwood has a different receiver, Jerry Peer of Columbus.
Neither receiver has resolved long-standing tenant issues since they were appointed in February, Legal Aid argued in its May 8 motions. Those problems included roach and rodent infestations, defective electric and plumbing fixtures and a lack of heat and hot water.
Both complexes require significant repairs “to come into compliance with health and building codes,” Legal Aid argued in the motions.
“When it comes to apartment complexes, what we really look for is just a hopefully local or at least a regional owner who has a good record of maintaining their properties,” said Nick DiNardo, managing attorney for the housing and consumer practices group at Legal Aid. “There are plenty of companies like that out there. So that’s what we’re looking for is a purchaser who has a plan to rehab the properties, has a budget to do that, and is going to come in and be a responsible manager.”
In addition to tenants, Vision & Beyond investors are likely to weigh in on Prodigy’s request to liquidate the company’s assets. That’s because many of them are accusing the company’s founders, Stas Grinberg and Peter Gizunterman, of using fraudulent documents to terminate their ownership.
“They transferred dozens of properties to holding companies without consent of the investors, depriving them of the core subject matter of their investment,” said J.P. Burleigh, an attorney representing investors in a 23-unit apartment building at Court and Vine streets downtown. “The end result was that Mr. Grinberg and Mr. Gizunterman absconded with something like $37 million in loan dollars that they obtained fraudulently and left everyone else in a state of crisis.”
Burleigh told Jenkins that his clients might be interested in a liquidation that reimburses their financial losses, but others will want to re-establish their ownership of the properties.
“There are dozens of different property owners in this case,” said Burleigh. “It is likely going to be a property-by-property analysis for each entity as to whether they are willing to consent to a court-ordered sale or whether they would oppose that.”
