Governor’s Square apartments
A beleaguered affordable housing development in Harrisburg still doesn’t have a buyer, but has a plan to move a step forward.
Uptown Partners, the owner of the Residences at Governor’s Square, plans to file a motion to change the type of bankruptcy it’s in and to transfer responsibility of the property to a court-appointed receiver.
Uptown Partners filed for Chapter 11 bankruptcy, having converted from Chapter 7, in August 2023 and, since then, has tried to find a buyer for its properties, which have hundreds of code citations and condemnations. However, the owners have struggled for months to find a buyer that met their requirements and that has received U.S. Department of Housing and Urban Development (HUD) approval, a requirement for a potential buyer.
At a hearing in the U.S. Bankruptcy Court for the Middle District of Pennsylvania on Tuesday, attorneys for Uptown Partners said that they reached an agreement with most parties on the case, including the city, to move towards having the Dauphin County Court of Common Pleas appoint a receiver to take over the case.
Uptown Partners first plans to file a motion to convert its Chapter 11 bankruptcy case back to Chapter 7, according to Robert Chernicoff, attorney for Uptown Partners. Typically, in Chapter 7 bankruptcy, a U.S. trustee is assigned to the case and the debtor’s assets are liquidated. However, in this case, Chernicoff said that a U.S. trustee would likely play a minimal role, and the debtor would remain in Chapter 7 only briefly. Then the county court would appoint a receiver to oversee Governor’s Square.
The receiver would also be responsible for appointing a management company and finding funds, such as state or federal grants, to keep the property operational, Chernicoff said. The current property manager, Landex Management, previously filed a motion to terminate its contract with Uptown Partners, with representatives explaining that they did not have sufficient funds to continue services. The decision on who to hire to manage the property would be up to the receiver.
Essentially, Uptown Partners would still own Governor’s Square, but would not have control over it, Chernicoff explained. He has shared previously that Uptown Partners was running out of money to maintain the property.
“My client doesn’t want the property anymore,” Chernicoff said.
If a receiver takes over control, they would be tasked with overseeing the operations of the property and with finding a buyer.
Governor’s Square consists of over 200 units, though fewer than half are currently occupied.
According to Chernicoff, Uptown Partners has recently received interest from another company, CIG Properties, information that it plans to pass along to a potential receiver.
At Tuesday’s hearing, Bankruptcy Chief Judge Henry Van Eck ruled several outstanding matters settled, including a motion to dismiss the case filed by the city, agreeing on the parties’ plan to move the issue forward.
Chernicoff said that the city agreed to issue code citations on Governor’s Square properties only until they’re under receivership. According to City Solicitor Neil Grover, Uptown Partners has received over 1,400 violations.
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