Efforts by Washington real estate investor Conrad Cafritz to avoid bankruptcy by negotiating an out-of-court settlement with his creditors have suffered a significant setback, sources familiar with the negotiations said yesterday.

Perpetual Savings Bank, one of Cafritz's largest lenders with outstanding loans of more than $63 million, has lost patience with the bargaining process and has begun to pursue Cafritz in court.

Cafritz owes $1.1 billion to about 70 lenders, including Perpetual.

This week, Perpetual received a judgment against the Cafritz Group and Cafritz personally for a $500,000 loan and interest and fees in the amount of nearly $85,000, according to court documents.

In addition, Perpetual recently filed notice of its intention to foreclose on a $4.65 million loan plus interest to Sieling Associates Limited Partnership of Clifton, in which Cafritz has a majority interest. The partnership, which owns and leases a number of warehouses in Howard County, Md., this week filed for bankruptcy protection to forestall the foreclosure.

Neither Cafritz nor his attorneys could be reached for comment yesterday. Bankruptcy lawyer David Kuney, an attorney at David & Hagner who is not involved in the matter, said it was possible Perpetual was taking aggressive legal steps merely to gain leverage in negotiations with Cafritz and that Cafritz ultimately could resolve his problems outside of court.

Perpetual officials said the actions speak for themselves. "Obviously, we're not being passive," said Judith McCaffrey, general counsel for Perpetual, which has suffered major losses on real estate loans and is operating under the close supervision of federal banking regulators.

The Perpetual filings are important because they signal that Perpetual, one of Cafritz's biggest creditors, has lost confidence in the "workout" process, said one leading bankruptcy attorney. The filing points to "big trouble for Conrad," the attorney said.

Sources familiar with Cafritz's effort to resolve his financial troubles have said if any major creditor abandoned the effort to negotiate an out-of-court solution, the process likely would be forced into court, with Cafritz filing for bankruptcy or creditors forcing him into involuntary bankruptcy.

Cafritz is one of several major Washington real estate investors with whom banks were eager to do business in the 1980s, often lending tens of millions of dollars on the basis of personal guarantees alone. The developer has given personal guarantees for loans of more than $500 million, one source has said.

In June of last year, Cafritz proposed a "workout" agreement to lenders that included salaries and incentives of $15.6 million for himself and key staff members for carrying out a three-year-reorganization plan. Those incentives alienated some on the creditors committee, sources said.

When that plan was not accepted, Cafritz began working with individual lenders to relax repayment terms while he attempted to sell or restructure his holdings -- which include a far-flung collection of office buildings, shopping centers, apartment buildings, hotels and warehouses.

The judgment against Cafritz in Fairfax County Circuit Court this week gives Cafritz 21 days to challenge the decision. It was the first step Perpetual needed to take before placing a lien against his properties. The judgment states that if Cafritz seeks bankruptcy protection, the bank could foreclose on his personal assets.

If Perpetual executes liens and Cafritz files for bankruptcy within 90 days, the liens would be erased. Otherwise, Perpetual would be at the head of the line of creditors. That knowledge could cause other Cafritz lenders to file a petition for involuntary bankruptcy against him, sources said.

Staff writer David S. Hilzenrath contributed to this report.