A partnership controlled by developer Jeffrey N. Cohen has sought protection from creditors in federal bankruptcy court, the latest blow to his ambitious plan to build homes, offices and stores in the Shaw area of Northwest Washington, ravaged in the 1968 riots.
The bankruptcy filing applies to only one partnership controlled by Cohen and directly affects only one property, the old Manhattan Laundry building at 1328 Florida Ave. NW, where Cohen has his office.
Renovation of the laundry building in 1986 was the first step in a $250 million Jackson Plaza development project in the city's Shaw neighborhood that has since been stalled by squabbling among community partners and financial problems. Despite Cohen's friendship and political support for D.C. Mayor Marion Barry, no other piece of the ambitious project has been completed, and Cohen is behind on payments on a number of other parcels included in the original development plan.
Cohen, said yesterday he had no comment on the bankruptcy court filing.
In late May, the mortgage lender on the laundry building, Goldome, a New York savings bank, filed a foreclosure notice. On June 18 the bank sued the partnership for breach of contract, seeking control of the building and recovery of an estimated $370,000 in rents collected from District Cablevision and other tenants.
The bank at the same time sued Cohen personally as guarantor of the note, seeking $6.9 million in principal and interest. Cohen has asserted that the building is worth more than that; the bank has asserted that the building is worth no more than that amount.
The next day, June 19, the partnership filed for protection under Chapter 11 of the U.S. Bankruptcy Code, which gives Cohen a chance to reorganize its finances while it is protected from creditors. The filing stops the foreclosure sale, but the bank's attorneys said they would pursue the claim against Cohen.
Cohen, who is in default on loans to at least five financial institutions and has stopped paying some employees, said last month he hoped for relief by obtaining a no-bid, $150 million city contract to build an office building on another of the Shaw properties. He said he was waiting on a commitment letter from the city, but no letter has been issued, city officials said.
Cohen's Shaw Development L.P. also is two years behind on payments to the city on a $11 million loan on the Shaw properties, but the city has not declared him in default.
Cohen's business and personal finances are closely linked. Last month, his father, retired oil distributor Norman Cohen, bought his Cleveland Park house at a foreclosure sale to protect him from creditors, and Jeffrey Cohen said he and his family would move within 90 days. Their beachfront home on Nantucket is also for sale.