Joel R. Glucksman
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WASA Studio Files for Chapter 11 Bankruptcy Protection
Author: Joel R. Glucksman
Date: August 26, 2015
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On August 10, WASA Studio, one of the oldest architecture and engineering firms in the U.S., announced that it had filed for Chapter 11 bankruptcy protection. The company was granted Chapter 11 protection from creditors and its office landlord due to excessive legal expenses.
WASA Studio saddled with legal costs
The legendary firm, known for designing the Grand Central Terminal train station and the Guggenheim Museum, is involved in two breach-of-contract lawsuits where ex-clients are seeking $11 million in total damages. However, according to court papers, WASA is seeking $2.82 million from these former clients for services rendered.
In the bankruptcy filing, WASA Studio also listed several other costly legal disputes, including a lawsuit with a construction company for a building in Bangalore, India. The company sued WASA last year for the return of a $989,000 services fee. The company claimed that these costly legal battles have come at a time when the firm’s business has been slow to recover from the recession, which has reduced project workloads and led to delays in receiving payment for services rendered. As a result, the firm has approximately $2.43 million worth of revenue from its professional services, but posted a net loss of $231,000 after expenses.
According to the Wall Street Journal, WASA Studio listed $5.29 million in assets and a debt total of $3.24 million, as of June 30. The firm’s five largest unsecured creditors include XIN Development Management East LLC for $10 million on a contingent claim, AECOS Ltd. for $988,792 on a contingent claim, Aetna Life Insurance Co. for $137,717 and A. Esteban & Co. for $127,044.
The landlord of WASA Studio, Lafayette Astor Associates LLC, sued the firm for $427,882 for nonpayment of rent at its Broadway office location. Lafayette then notified the firm of its impending eviction for missing its rent payment and sought possession of the premises. The firm had made its payment for June, but missed its July deadline, prompting the two parties to renegotiate a payment agreement that involved WASA making one payment of $225,463 as a judgment for unpaid rent and fees. However, according to a statement by WASA’s Senior Managing Partner Harry Spring, the firm was unable to afford the monthly payment arrangement.
The reorganization plan
Currently, the firm will use Chapter 11 bankruptcy protection to block its landlord from continuing with eviction proceedings from its office location. WASA Studio will then seek buyers to infuse cash into the company to stabilize operations, and look to relocate to a new office location within the same building. There are no prospective buyers listed in bankruptcy papers, nor has a sale price for the firm been determined. However, under bankruptcy law, a sale of the company would need approval from Bankruptcy Judge Michael E. Wiles.
Are you a creditor in a bankruptcy? Have you been sued by a bankrupt? If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.
- Practices: Bankruptcy & Creditors' Rights
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WASA Studio Files for Chapter 11 Bankruptcy Protection
Author: Joel R. Glucksman
On August 10, WASA Studio, one of the oldest architecture and engineering firms in the U.S., announced that it had filed for Chapter 11 bankruptcy protection. The company was granted Chapter 11 protection from creditors and its office landlord due to excessive legal expenses.
WASA Studio saddled with legal costs
The legendary firm, known for designing the Grand Central Terminal train station and the Guggenheim Museum, is involved in two breach-of-contract lawsuits where ex-clients are seeking $11 million in total damages. However, according to court papers, WASA is seeking $2.82 million from these former clients for services rendered.
In the bankruptcy filing, WASA Studio also listed several other costly legal disputes, including a lawsuit with a construction company for a building in Bangalore, India. The company sued WASA last year for the return of a $989,000 services fee. The company claimed that these costly legal battles have come at a time when the firm’s business has been slow to recover from the recession, which has reduced project workloads and led to delays in receiving payment for services rendered. As a result, the firm has approximately $2.43 million worth of revenue from its professional services, but posted a net loss of $231,000 after expenses.
According to the Wall Street Journal, WASA Studio listed $5.29 million in assets and a debt total of $3.24 million, as of June 30. The firm’s five largest unsecured creditors include XIN Development Management East LLC for $10 million on a contingent claim, AECOS Ltd. for $988,792 on a contingent claim, Aetna Life Insurance Co. for $137,717 and A. Esteban & Co. for $127,044.
The landlord of WASA Studio, Lafayette Astor Associates LLC, sued the firm for $427,882 for nonpayment of rent at its Broadway office location. Lafayette then notified the firm of its impending eviction for missing its rent payment and sought possession of the premises. The firm had made its payment for June, but missed its July deadline, prompting the two parties to renegotiate a payment agreement that involved WASA making one payment of $225,463 as a judgment for unpaid rent and fees. However, according to a statement by WASA’s Senior Managing Partner Harry Spring, the firm was unable to afford the monthly payment arrangement.
The reorganization plan
Currently, the firm will use Chapter 11 bankruptcy protection to block its landlord from continuing with eviction proceedings from its office location. WASA Studio will then seek buyers to infuse cash into the company to stabilize operations, and look to relocate to a new office location within the same building. There are no prospective buyers listed in bankruptcy papers, nor has a sale price for the firm been determined. However, under bankruptcy law, a sale of the company would need approval from Bankruptcy Judge Michael E. Wiles.
Are you a creditor in a bankruptcy? Have you been sued by a bankrupt? If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.