Auraria Student Lofts fights lender’s receivership motion with lawsuit

By Sarah Lizee

Olympia, Wash., March 11 – 5280 Auraria, LLC, which does business as Auraria Student Lofts, has filed a complaint against lender DB Auraria LLC, according to documents filed Friday with the U.S. Bankruptcy Court for the District of Colorado.

As a reminder, the debtor owns and manages the Auraria Student Lofts located at 1051 14th Street and 1405 Curtis Street in Denver.

On Nov. 20, 2019, the debtor entered into a loan with Cantor Commercial Real Estate Lending, LP, through which the original lender agreement to loan $46.5 million to the debtor.

In November 2021, DB Auraria purchased the promissory notes and guaranty related to the loan.

The debtor filed Chapter 11 on June 9, 2022 as a single-asset real estate case.

The company’s plan of reorganization seeks to refinance the loan and pay creditors in full by the end of 2024 or sell the property and pay the sale proceeds to creditors by the end of 2024 under a waterfall priority.

On March 4, DB Auraria filed a receivership motion in a New York court without any notice to the debtor or the Colorado court, the company said.

The lender is seeking a receiver to, among other things, take over “all legal and equitable interests owned directly or indirectly by judgment debtors in any real estate,” which includes the Denver property.

The debtor said it raised concerns over the scope of the proposed receivership order at a status conference on Thursday, because it seeks to replace the debtor’s management and take control over the property, interfering the administration of the debtor’s bankruptcy case, including the pending plan of reorganization and the debtor’s pending objection to DB Auraria’s claim in the case.

Later on Thursday, DB Auraria filed a letter with the court that claims to fix the receivership order so that it will no longer violate the automatic stay or interfere with the Chapter 11 case.

A New York court will hear the receivership motion on an expedited basis on Tuesday.

The debtor said there is an “immediate and urgent need for intervention” of the Colorado court to address the causes of action in its complaint on an emergency basis.

The San Clemente, Calif.-based company provides student housing in Denver. The company filed bankruptcy on June 9, 2022 under Chapter 11 case number 22-12059.

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