Charlotte Observer: EpiCentre Developers Off Project, Must Pay $1.5 Million
EpiCenter. Photo: Jason E. Miczek EpiCentre developers Afshin Ghazi and George Cornelson III will pay $1.5 million each and give up ownership and involvement in the uptown entertainment complex, according to a settlement reached Monday in bankruptcy court. In return, the project's new lender, Blue Air 2010 LLC, will release the men from future litigation and the bankruptcy trustee will no longer investigate claims that the men fraudulently transferred money before putting the complex into Chapter 11 bankruptcy protection. Blue Air 2010 LLC, a group of investors that owns the EpiCentre's loan, is set to become the new owner if a proposed reorganization plan is confirmed by the bankruptcy court. "(Ghazi and Cornelson) are getting out of the EpiCentre completely," said trustee's attorney Tom Moon. He helped negotiate the settlement, which was being worked on until minutes before it was shown to U.S. bankruptcy court Judge George Hodges on Monday afternoon. A hearing on a proposed reorganization plan was postponed until next month so Blue Air could revise it. If the bankruptcy court approves the plan, it would remove a cloud of uncertainty that has swirled for nearly two years over the project at College and Trade streets. The EpiCentre has been viewed by city officials as a key part of uptown's redevelopment - particularly this September, when the Democratic National Convention will draw tens of thousands to neighboring Time Warner Cable Arena. Built on the Lynx light rail line, the EpiCentre is filled with a mix of office and mostly retail space. Tenants include a night club, movie theater, restaurants, bars, an insurance agent and a drugstore. There is also a hotel and parking deck. The combined $3 million to be paid by Ghazi and Cornelson will be added to $1.1 million held in escrow and used to pay unsecured general creditors. Ghazi will also no longer be involved with the EpiCentre's popular movie theater, Mez restaurant, Kazba nightclub and parking deck. Ghazi, who attended the hearing, declined to comment. Ghazi and Cornelson will also give up the air rights to the center. The air rights are valuable not only because they control future development such as high-rises, but because they are tied to millions of dollars in potential revenues from the EpiCentre's parking deck. A condominium tower was originally scheduled to be built but plans fell through. Buyers who paid deposits lost tens of thousands of dollars. Ghazi has told the Observer his family members were among those who lost money. A Ghazi-controlled company, 210 Trade Investments LLC, bought the air rights to the center at a foreclosure auction, but Blue Air and the trustee have said 210 Trade used the EpiCentre's money to close the deal, according to court documents. Blue Air and the trustee have accused Ghazi and Cornelson of insider dealing, falsified bookkeeping and making numerous false statements in court, according to court filings. Speaking after the hearing, Moon told the Observer that Cornelson has "cooperated very well" during the nearly 2-year-old court case. Moon said "there's a substantial possibility" that Cornelson was "also a victim." He did not elaborate. Blue Air bought the EpiCentre's $94 million loan in fall 2010, four months after Ghazi and Cornelson put the project into bankruptcy protection. The project's original lender, Regions Bank, had started to foreclose on the project. In October, Hodges appointed Elaine Rudisill as trustee to manage the EpiCentre. He later expanded her powers so she could investigate and sue people to recover assets believed to belong to the project. While Rudisill will no longer look into Ghazi and Cornelson's actions, she still will try to recover money for creditors. For example, she will examine bills paid to vendors to ensure payments were appropriate. The settlement agreements reached with Ghazi and Cornelson will be sealed when they are filed with the court. Attorneys will provide a summary of the key terms of the agreements, which will be incorporated into the proposed reorganization plan, which could be filed next week. Attorneys said agreements in bankruptcy cases are sometimes sealed if the court doesn't think the information is important for creditors to know. Moon told the court that creditors will be better off because of the agreements. "I think the terms increase the amount of money available to creditors right off the bat," he said. Copyright 2012 The Charlotte Observer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.