FGIC legal dispute with Detroit stems from Chapter 9 settlement
The owners of the Detroit land occupied by the defunct Joe Louis Arena have sued the city, requesting two more years to develop the riverfront site.
The lawsuit was filed on Monday in U.S. Bankruptcy Court for the Eastern District of Michigan by Gotham Motown Recovery, a development company controlled by New York based Financial Guaranty Insurance Company. City officials did not immediately respond to a request to comment.
The company owns the rights to develop the site of Detroit’s Joe Louis Arena. FGIC, one of Detroit’s former creditors, acquired the site in the settlement of the city's historic Chapter 9 bankruptcy. The company was owed $1.1 billion by the city before Detroit filed for Chapter 9 and the confirmation plan included terms of the land swap.
In the complaint, Gotham asks the court to “remedy the city’s failure to agree to Gotham’s request for a two-year extension of the deadline to submit a development proposal.”
Joe Louis Arena was home to the Detroit Red Wings of the National Hockey League from 1979 to 2017.
Gotham Motown Recovery had planned to turn the property into a hotel with 300 rooms after the team moved to Little Caesars Arena but the company said in statement that “significant changes in the Downtown Detroit real estate market since 2014 and the increased complexity of the development project gave Gotham the right to request a two-year extension to the proposal deadline.”
In the lawsuit FGIC says it requested a 24-month extension from the Nov. 21, 2017, deadline on July 20 but the city agreed to only a 180-day extension, even though the settlement approved in bankruptcy court allows for a two-year extension.
"Gotham is committed to developing and revitalizing the Riverfront area where the Joe Louis Arena has stood for many years. We have dedicated tremendous resources to the project and had been working closely with the city to ensure a successful development. We are surprised and disappointed that the City has now chosen not to cooperate with us, requiring Gotham to file this lawsuit," FGIC's CEO Tim Travers said in a statement.
"We are concerned that the city's actions may hinder and delay a successful development on the Joe Louis Arena site, which is our objective. We believe that a prompt resolution of this dispute will be in the best interests of those who live in and visit Detroit for years to come and look forward to resuming what had been an excellent partnership with the City to complete this important development with a shared vision."