Lehman Brothers seems set to upstage SunCal today with an announcement to commit $3.7 million to demolish fire-hazard buildings at the failed SunCal Oak Knoll project. A previous announcement in October by SunCal, in which they claimed that $500,000 of Lehman Brothers bankruptcy estate money would go towards cleanup and hazard abatement at the site was unsupported by bankruptcy court docket information, and essentially proven false.
A media advisory, sent late yesterday by the City of Oakland, announced a press conference for 9:30am today at the Mountain Boulevard entrance to the Oak Knoll site, in Oakland. The advisory, sent by Alex Katz of the Oakland City Attorney’s office indicated that City Attorney John Russo, City Councilmember Larry Reid, Alameda County District Attorney Nancy O’Malley, Oakland Fire Department Officials “and others” would be in attendance.
It also said that “More than a year ago, development of the property stalled when builder SunCal went into bankruptcy following the collapse of Lehman Brothers” and that at the press conference “City Attorney Russo will announce a commitment from Lehman Brothers to fund $3.7 million to clean up the property and demolish more than 90 World War II-era buildings.”
The bankruptcy court docket for the consolidated bankrupt Lehman Brothers-SunCal projects did not, at press time, indicate any agreement between attorneys for SunCal, Lehman and the bankruptcy trustee to use Lehman Brothers bankruptcy estate money for the cleanup. Rather, Lehman and SunCal attorneys continue their wrangling back and forth over this, and other issues. Instead, the money may be coming from one of Lehman’s non-bankrupt subsidiaries, such as Lehman Brothers Real Estate Partners II (LBREP II) or Lehman Ali, Inc.; it’s their parent, Lehman Brothers Holdings, that is bankrupt. Alex Katz did not respond to an e-mail requesting clarification as to who was putting up the money.
Lehman’s attorneys may be responding to threats of criminal prosecution from Alameda County District Attorney Nancy O’Malley. Last month, Oakland Hills residents that live near the SunCal site and who have been concerned about the risk of fire and health hazards from asbestos at the site asked O’Malley to start criminal prosecution against agents for Lehman, SunCal, and others. At the time, Action Alameda News asked O’Malley about the citizens’ request and she responded that her office was “looking into it.”
In Alameda, residents will vote on SunCal’s Alameda Point Revitalization Initiative on February 2nd, 2010. Nancy O’Malley is a City of Alameda resident.
Interesting. That budget is $2 Million short of what the Oakland Fire Chief and Redevelopment Agency Chief told Lehman Brothers’ and SunCal Oak Knoll’s bankruptcy court judges was necessary to do the fire hazard and asbestos abatement at Oak Knoll EXCLUDING the old multi-story hospital building.
So the practical question is who welched on that $2 Million in necessary money, Lehman or SunCal?
Time will tell.
The City of Oakland, in early October, had said it would take $6.7 million in a press release, excluding the main naval hospital building.
SunCal is a 10% partner in the Oak Knoll project, but their money is nowhere to be found to make up the difference.
I was glad to read District Attorney Nancy O’Malley was included in this. But sorry it had to get to that level. Guess no one really wants to go to jail after all. Money is only paper, but contempt of court and criminal prosecution is the ultimate equalizer. Break the law, go to jail. Now if she would only prosecute SUNCAL for its signature gathering fraud.
Seems pretty clear that it was only the threat of criminal prosecution that got Lehman to budge…
http://www.examiner.com/examiner/x-15523-Alameda-County-Political-Buzz-Examiner~y2009m11d21-US-Bankruptcy-Court-judge-approves-550000-for-abatement-at-Oak-Knoll