Saucke Bros. gets deadline to file Chapter 11 plan

Will Astor//June 4, 2004//

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After nearly two years under bankruptcy court protection without submitting a reorganization plan, Saucke Bros. Construction Co. Inc. has 90 days to submit one.
The deadline comes after the U.S. trustee’s office filed papers in the U.S. Bankruptcy Court here seeking to throw the Auditorium Center building owner’s Chapter 11 case out of court or force the firm to liquidate.
Any sale of the Auditorium Center building would not involve the Auditorium Theatre. The 3,000-seat theater is the largest of six lavishly decorated art deco theaters in the massive former Masonic Temple on East Main Street and the home of the Rochester Broadway Theatre League.
RBTL paid $1 million to buy the space from Saucke Bros. in March and plans several million dollars in renovations for the theatre. Saucke Bros. still owns the rest of the building.
The construction company asked for court protection in August 2002. Raymond Saucke and William Saucke-the firm’s president and CEO, respectively-filed personal Chapter 11 cases at the same time, listing as assets partnerships in nearly a dozen commercial properties.
Motions filed separately in Bankruptcy Court here May 21 by Kathleen Schmitt, the assistant U.S. trustee in charge of the Rochester office, complain that in the nearly two years since the cases were filed neither the Sauckes nor their firm have filed reorganization plans. Given the time under court protection with no apparent results, Schmitt’s filing states, none of the cases appears to have “a reasonable likelihood of rehabilitation.”
A hearing on those motions is slated for June 24 in Bankruptcy Court.
However, Schmitt said that, after meetings with attorneys representing the brothers and the firm last week, she is willing to consider giving the construction company more time to prepare a plan and also could be willing to let the brothers drop their bankruptcy cases.
Michael Arnold of Place and Arnold in Fairport, who represents Saucke Bros. has promised to present a confirmable reorganization plan within 90 days, Schmitt said. In turn, she has promised to ask Bankruptcy Court John Ninfo II to call off the June 24 hearing.
When it asked for court protection, Saucke Bros. had ceased to operate as a construction firm, leaving millions of dollars in work unfinished. Those uncompleted jobs included several big public school projects in the Finger Lakes and a large Department of Housing and Urban Development project in Horseheads.
Disputes over those jobs, some of which have yet to be resolved, so far have kept the construction company from filing a plan, Raymond Saucke said this week. He and his brother do not intend to resuscitate the company’s construction business, Saucke added. But they do plan to keep it going as a real estate company with the Auditorium Center as a principal asset.
Disputes over the unfinished construction jobs-including a $5 million lawsuit and a $1.6 million lawsuit targeting the construction firm and its bonding agent-now are “80 percent resolved,” Saucke said.
“We’re meeting next week with our attorneys and we expect to file a plan and disclosure statement shortly after that,” he said. “We have a sense of optimism.”
Shortly after Saucke Bros. sought court protection, the Auditorium Center lost a major tenant with the Rochester City School District’s decision not to renew a $30,000 monthly lease on office space it rented in the building.
While they have not filed a workout plan yet, the Sauckes have made considerable strides toward stabilizing the building, adding new tenants and doing upgrades on the 77-year-old structure, Arnold said.
Douglas Lustig of Chamberlain, D’Amanda, Oppenheimer & Greenfield is representing the Saucke brothers in their personal bankruptcies.
A longstanding dispute with the Binghamton-based BSB Bank & Trust Co. over a roughly $900,000 mortgage on a Rochester-area commercial property has been resolved by turning over the property to the bank, Lustig said. The BSB loan was one of the biggest stumbling blocks to submitting plans in the brothers’ personal filings.
If Schmitt and the court agree, Lustig said, the brothers believe that letting their personal cases be dismissed and settling remaining matters through out-of-court talks with creditors would be the best course.
Schmitt said, however, that she is reserving judgment on whether to go along with that approach. Dismissal is, of course, always an option in Chapter 11 motions to convert or dismiss, she said. But that is true only if creditors do not end up as bigger losers than they would be under a court-supervised liquidation.
In the Sauckes’ cases, Schmitt said, she will not oppose dismissal if the brothers can get creditors holding half or more of their debt to agree to the move. Otherwise, Schmitt said, she will push for a workable plan or conversion to Chapter 7.
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