Hudson Hotel Chapter 11 After $80M Parkview Foreclosure
Hudson Hotel Files Chapter 11 After Parkview's $80M Foreclosure to Save 440-Unit Conversion
ElevenFlo Research
March 6, 202624 min readUpdated September 8, 2026
The fate of the former Hudson Hotel now turns on a single legal question that the Delaware bankruptcy court has sent to the U.S. Court of Appeals for the Third Circuit: whether the 99-year instrument governing the Manhattan site is a residential lease, a nonresidential lease, or a disguised financing arrangement. The answer controls how much rent the debtors must pay, whether they can hold the property long enough to finish a 440-unit conversion, and how a dispute between lender-turned-owner Parkview Financial and ground lessor 356W58 Ground Lessor LLC is ultimately resolved. Hudson 1701/1706, LLC and co-debtor Hudson 1702, LLC filed chapter 11 petitions in the U.S. Bankruptcy Court for the District of Delaware (Case No. 25-11853) on October 22, 2025, listing between $100 million and $500 million in both assets and liabilities.
The case is defined by Parkview's three overlapping roles. As the First Day Declaration recounts, Parkview foreclosed on the equity interests in the debtor entities in July 2025, installed its affiliate PV Hudson, LLC as sole member, then financed the chapter 11 cases as DIP lender. That structure — foreclosing owner, prepetition senior lender, and postpetition lender in one party — shapes nearly every contested matter, from a creditors' committee Rule 2004 investigation to the recharacterization fight now on appeal. The conversion of the 24-story building that Ian Schrager and Philippe Starck renovated for $125 million in 2000 remains stalled, with 32 rent-stabilized single room occupancy units occupied throughout.
Parkview Financial REIT, LP; upsized to $43.54 million (from $32.76 million)
Property
Former Hudson Hotel, 356-358 West 58th Street, Manhattan
Planned Conversion
440 market-rate residential apartments
Ground Lessor
356W58 Ground Lessor LLC (99-year ground lease)
Case Snapshot
Property History and SRO Tenancy
The building at 356-358 West 58th Street was constructed in 1928-1929 as the American Women's Association clubhouse and converted into the Henry Hudson Hotel in 1941. A portion of the building has long contained single room occupancy units that became central to the bankruptcy.
The Morgan Hotel Group purchased the building for $125 million in 1997, and a renovation led by Ian Schrager and designer Philippe Starck invested another $125 million before the property reopened in 2000 as "The Hudson," operating 878 guest rooms.
The hotel closed permanently in November 2020 during the COVID-19 pandemic, and Eldridge Industries acquired it along with Delano South Beach from sbe. In early 2022, Montgomery Street Partners purchased the property for $207 million, and CSC Real Estate—led by brothers Alberto and Salomon Smeke—signed a 99-year ground lease to redevelop it. Parkview Financial provided a $207 million leasehold mortgage for a conversion plan calling for approximately 440 market-rate rental apartments and over 50,000 square feet of retail space, targeting completion by May 2024.
Conversion Stall and Equity Foreclosure
CSC Real Estate and the Conversion Financing.
The 99-year ground lease with Montgomery Street Partners (operating through 356W58 Ground Lessor LLC) established the redevelopment framework, while the $207 million Parkview mortgage provided construction financing. Northwind Group later purchased a $100 million senior A-Note from Parkview as part of the financing structure. The first-day declaration of co-CRO Alan Tantleff identifies Parkview Financial REIT, LP as the prepetition senior secured lender across two facilities: an $81,782,527 building loan and a $125,217,473 project loan.
Thirty-two single room occupancy units remained occupied in the building, housing 46 persons who were primarily low-income seniors, some of whom were homebound. Those tenants held legal protections under New York's housing regulations that constrained the conversion timeline.
The SRO Tenant Crisis.
The conflict with SRO tenants emerged after CSC took control. In June 2022, internal demolition of mechanical systems and partitions began while long-term tenants remained in occupancy. A Tenant Protection Plan was not presented until July 2022—after construction work had already commenced. Tenants received a letter stating demolition work would commence on February 6, 2023.
The tenants organized and brought their concerns to Manhattan Community Board 4 in September 2023, presenting alleged incidents of harassment. New York City's Housing Preservation Department documented 68 tenant complaints about the Hudson and issued 29 housing violations since the renovations began in mid-2022. The complaints described consistent problems: lack of hot water and heat, peeling paint, exposed wiring, and rodents.
On September 25, 2023, HPD found "reasonable cause" to believe harassment occurred. Under New York City law, new property owners must obtain a Certificate of No Harassment (CONH) before applying for permits to demolish or change the occupancy of buildings with SRO tenants.
After interviews with tenants, HPD denied the owner's initial CONH application, a determination that under NYC regulations required immediate cessation of work on occupied floors. Construction allegedly continued until the local community board pressured the Department of Buildings to issue a partial stop-work order in February 2024.
According to Manhattan Community Board 4's October 2024 letter to HPD, tenants were living in "semi-demolished, active construction zones". The board noted that the majority of these tenants are low-income seniors, some homebound. The partial stop-work order prohibited work on tenant-occupied floors, though construction continued on empty floors.
Under Local Law 1 of 2018, a denied CONH application triggers a moratorium on altering or demolishing the building — typically five years — unless the owner enters an HPD Cure Agreement to address the harassment findings. The laws governing SROs are divided among the Administrative Code, the Multiple Dwelling Law, and the Rent Stabilization Code: an SRO building must house six or more units and have been built on or before July 1, 1969 for Rent Stabilization Code coverage, and Administrative Code Section 26-521 bars eviction of SRO tenants who have lawfully occupied a unit for 30 consecutive days. NYC Rent Guidelines Board data shows that of 4,474 SRO units registered with the state housing agency, only 59% were registered as rent stabilized. In December 2024, the City Council approved "City of Yes for Housing Opportunity," easing zoning for incremental housing, and Governor Hochul signed legislation permitting Class B hotels within 400 feet of residential districts to operate as permanent residential space — reforms that do not address the SRO tenant protections that affected the Hudson project.
Financial Deterioration.
The stop-work order and regulatory delays produced financial pressure and pushed the project past its original May 2024 completion target. In November 2024, CSC defaulted on the loan maturity under the Prepetition Loan Agreement with Parkview. The ground lessor demanded higher ground rent—the Fourth Amendment to the Ground Lease, dated March 29, 2024, increased base rent from $6.4 million per year to $8.75 million per year—and asserted multiple defaults, including construction delay violations, mechanics' liens on the property, and failure to meet substantial completion deadlines, threatening to terminate the 99-year ground lease. Union pension fund withdrawal liability totaled $17.285 million, and in December 2024 the debtors negotiated a $4.582 million lump-sum payment to satisfy all future withdrawal liability. By April 2025 CSC was facing foreclosure; the Smeke brothers averted the threatened foreclosure action.
Parkview Lawsuit and Equity Foreclosure.
The relationship between Parkview and CSC deteriorated in mid-2025. On June 30, 2025, Parkview sued Alberto and Salomon Smeke in a lawsuit alleging "gross mismanagement" of the project. According to Parkview's complaint, the Smekes' mismanagement led to the stop-work order that halted construction.
The Smeke brothers contested Parkview's characterization. In their response, they argued that Parkview itself created the situation by failing to properly fund the project, countering that there had been no mismanagement and that Parkview had failed to fulfill payment obligations from the parties' earlier foreclosure-avoidance negotiations, including a $12.5 million incentive payment. In a counterclaim later filed in the bankruptcy case, Alberto Smeke Saba, Salomon Smeke Saba, and CSC Hudson LLC alleged Parkview's "own repeated bad faith refusals to fund proper draw requests" left the general contractor, subcontractors, and other vendors unpaid and halted work at the project.
The lawsuit was discontinued with prejudice the following month, and Parkview proceeded with a UCC foreclosure. On July 25, 2025, Parkview conducted a UCC foreclosure sale on the equity interests. Parkview submitted a credit bid of $80 million of existing prepetition indebtedness, acquiring the equity interests and transferring them to PV Hudson LLC, a Parkview affiliate. Post-foreclosure, PV Hudson LLC became the sole member of each debtor entity. After the credit bid, approximately $146 million remained outstanding as of the petition date, plus accrued interest and fees, and Parkview extended an emergency bridge advance of up to $1 million under a prepetition cash collateral agreement.
CSC Real Estate no longer controlled the project. A settlement and release agreement dated August 7, 2025 formalized the separation, and a representative for CSC confirmed that Parkview was now the only company involved with the project. The Smeke brothers were listed as creditors with approximately $1.7 million in claims in the bankruptcy schedules.
Parkview's Dual Role and the Contested DIP Facility
With Parkview now in control and facing a ground lease termination threat, the debtors filed chapter 11 petitions on October 22, 2025, in Delaware. Parkview's stated goal was to recapitalize the building and continue the conversion of the 24-story property into 400-plus units of rental housing without CSC Real Estate's involvement. The First Day Declaration describes the development history, SRO tenant complications, and the events leading to Parkview's equity foreclosure, and the debtors designated FTI Consulting's Alan Tantleff among the co-chief restructuring officers effective as of the petition date. The first-day motions sought joint administration of the two debtor entities, approval of Kurtzman Carson Consultants (operating as Verita Global) as claims and noticing agent, and interim authorization of life-safety critical vendors. The filing invoked the automatic stay to prevent the ground lessor from terminating the ground lease, and the debtors' Ground Lease Extension Motion was granted on December 12, 2025.
The DIP structure. Parkview Financial, serving as both the 100% indirect owner (through PV Hudson LLC) and the proposed DIP lender, sought approval of new-money postpetition financing in the DIP Financing Motion, explaining that no third-party financing was available. The facility carried a dollar-for-dollar roll-up of prepetition secured obligations as DIP loans funded: on entry of the interim order, $12,270,387 of prepetition obligations were rolled into DIP debt on a 1:1 basis. Adequate protection for Parkview included replacement liens and section 507(b) superpriority claims subject to a carve-out covering unpaid prepetition professional fees, up to $1 million of post-trigger professional fees, a $25,000 trustee amount, and statutory fees.
Term
Details
DIP Lender
Parkview Financial REIT, LP
Original Commitment
$32,762,104 (interim availability $12,270,387)
Upsized Commitment
$43,538,350 (April 21, 2026)
Interest Rate
12% per annum (PIK, paid monthly); 2% default-rate increase
Maturity
Earliest of default, 12 months from petition, asset sale, or plan effective date
Roll-Up
Dollar-for-dollar, capped at the total commitment
The court entered the Interim DIP Order on November 17, 2025, releasing $12.27 million in interim availability. Three parties objected to final approval: the Smeke brothers on December 5, 2025, citing their former equity interests and the DIP terms; the ground lessor on December 9, 2025, over ground lease obligations and priority; and the Official Committee of Unsecured Creditors on December 10, 2025, over the DIP terms and Parkview's dual role as owner and lender. The court entered the final DIP and cash collateral order on January 14, 2026.
The April 2026 upsizing. In April 2026 the debtors moved to increase the DIP commitment and extend the budget. The committee filed a limited objection and another party objected to the size of the increase, but on April 21, 2026 the court entered a supplemental final DIP order increasing the commitment by $10,776,246 to $43,538,350, raising the maximum roll-up to the same amount and approving the amended budget; the order recites that all objections were withdrawn, resolved, or overruled. The estate has continued drawing on the facility: the debtors' May 2026 monthly operating report showed approximately $6.92 million of cash on hand at month-end against total disbursements of roughly $2.72 million for the month, and the debtors' June 2026 monthly operating report reported $6,917,692 of beginning cash, $2,198,839 of receipts, $2,711,935 of disbursements, and $29,949,216 of postpetition payables outstanding, with none past due.
Ground-Lease Recharacterization and the Third Circuit Appeal
On December 26, 2025, the ground lessor moved to convert or dismiss the cases, arguing the filing was a bad-faith litigation tactic by debtors that lacked the funds and expertise to finish the project. The ground lessor withdrew that motion on January 14, 2026, the same day the final DIP order was entered, and the dispute shifted to the nature of the ground lease itself.
Recharacterization adversary. Days before the dismissal motion, the debtors filed a December 22, 2025 adversary complaint seeking to recharacterize the 99-year ground lease (dated May 4, 2022) as a disguised financing arrangement rather than a true lease, arguing the structure functions as a high-cost loan. By March 2026 the Delaware court had requested additional evidence from the debtors regarding their intentions for the property. The court appointed a mediator on April 13, 2026, but the mediator filed a certificate of completion on May 4, 2026 without a global resolution. After a May 15, 2026 bench ruling, the court entered an order granting the ground lessor's motion to dismiss the complaint without prejudice, with 30 days' leave to amend. The debtors filed an amended recharacterization complaint on June 10, 2026.
Residential classification and the certified appeal. On a parallel track, the debtors moved for a determination that, if the instrument is a true lease, it is a lease of residential rather than nonresidential real property. On April 22, 2026 the court granted that motion, ruling that—if a true lease—the ground lease is residential real property governed by section 365(d)(2), so the stricter nonresidential deadlines and current-payment obligations of sections 365(d)(3) and (d)(4) do not apply. The order did not authorize assumption, rejection, or assignment, and was not a finding that the instrument is a lease. The ground lessor sought and obtained certification of a direct appeal to the Third Circuit. On May 28, 2026, Chief Judge Owens certified the direct appeal under 28 U.S.C. § 158(d)(2), finding the residential-versus-nonresidential classification standard a pure question of law with no controlling Third Circuit or Supreme Court precedent.
Post-petition rent dispute. On June 2, 2026 the debtors moved to determine prospective post-petition rent, arguing that because the lease is residential they are not obligated under section 365(d)(3) to pay full contract rent currently, and that any administrative claim should be capped at the actual benefit to the estate—the base rents collected from the SRO tenants—rather than the contract base rent of $729,166.67 per month set by the Fourth Amendment. They contend the contract rent "greatly exceeds the actual benefit" while residential work remains suspended under stop-work orders. The ground lessor objected on June 16, 2026, arguing that continued occupancy is an actual, necessary cost of preserving the estate under section 503(b), that the contract rate is the presumptive fair market value, and that the debtors owe the full $729,166.67 monthly base rent plus approximately $2.58 million in accrued additional rent.
The dispute escalated on July 2, 2026, when the ground lessor moved to compel the debtors to draw on the DIP facility and escrow the June, July, and August 2026 ground rent payments while the rent motion remains unresolved. The motion points to a supplemental DIP budget line item allocating $2,926,672 for May-through-August ground rent and frames the debtors' refusal to draw those funds as a departure from their own earlier DIP-budget representations. The underlying rent motion is now noticed for a September 9, 2026 hearing.
The debtors opposed the escrow motion, disputing the $2,187,501 figure the ground lessor sought to compel from June-through-August draws. In its reply, the ground lessor asserted — without adjudication — that the debtors had also stopped paying roughly $3.3 million in real estate taxes due July 1, 2026. The court heard argument on the escrow motion on July 16, 2026; no order or transcript resolving the request had appeared on the docket as of July 23, 2026.
Committee Rule 2004 investigation. The U.S. Trustee appointed an Official Committee of Unsecured Creditors on November 25, 2025, and the ground lessor sits on that committee. On January 9, 2026 the committee obtained a Rule 2004 discovery order against Parkview, Alberto Smeke Saba, and Salomon Smeke Saba, authorizing broad discovery into funding requests, foreclosure-related materials, insider transactions, communications with Parkview, and efforts to lift the stop-work order. That investigation has remained active into spring 2026, pursued through subpoenas to Parkview and the Northwind Group, Rule 30(b)(6) deposition notices, expert reports, and repeated stipulated extensions of the committee's lien and claim challenge period.
First American Title interpleader settlement. A separate adversary proceeding stems from First American Title Insurance Company's December 2025 interpleader action over escrowed funds tied to Parkview's dealings with CSC Hudson and the Smeke brothers. On July 17, 2026, the debtors moved to approve a Rule 9019 settlement among Parkview, CSC Hudson, and Alberto and Salomon Smeke Saba that would release the registry-held escrow funds and accrued interest to the guarantor parties and resolve the interpleader dispute. The motion was noticed for a September 15, 2026 hearing and remained pending, not approved, as of July 23, 2026.
Professional Retentions, Fee Awards, and the DLA Piper Denial
The debtors assembled a multi-firm professional bench within the first weeks of the petition, with the attorneys tied to the Hudson entities profiled as the retention record took shape. Delaware counsel Chipman Brown Cicero & Cole, LLP serves as debtors' counsel, and the court authorized Boies Schiller Flexner LLP as co-counsel effective January 23, 2026 as the ground-lease litigation intensified. The debtors also retained Ditchik & Ditchik, PLLC as ordinary-scope special counsel for New York property tax-appeal work. The committee retained Seward & Kissel LLP and Morris James LLP as counsel and Province, LLC as financial advisor.
The roster became contested when DLA Piper's proposed special-counsel role drew conflict objections from the committee, the U.S. Trustee, the former Smeke principals, and the ground lessor, all emphasizing the firm's prior and continuing representation of Parkview on matters tied to the debtors, the ground lease, and the foreclosure. The court denied DLA Piper's retention following the January 13, 2026 omnibus hearing.
On June 15, 2026 the court entered an omnibus order approving interim fees for the second interim period, generally covering January 1 through March 31, 2026. Chipman Brown Cicero & Cole was awarded $569,617.00 in fees and $9,429.29 in expenses; Boies Schiller Flexner $1,119,776.85 in fees and $35,753.69 in expenses, reflecting its role as lead litigation counsel in the recharacterization fight; Seward & Kissel $453,159.08 in fees (with a $116,458.32 holdback held in abeyance) and $6,492.00 in expenses; and Morris James $81,450.50 in fees and $4,404.75 in expenses.
Claims Bar Dates and Plan Exclusivity
The court entered the bar date order on March 9, 2026, fixing a general claims bar date of April 6, 2026, a governmental bar date of April 20, 2026, with section 503(b)(9) claims due by the general bar date and rejection-damages claims due the later of the general bar date or 21 days after service of a rejection order. As of an April 9, 2026 claims-register summary, 31 proofs of claim had been filed. On June 12, 2026 the court entered an administrative-expense bar date order setting July 24, 2026 as the deadline to file requests for administrative expense claims arising from the petition date through June 30, 2026.
No chapter 11 plan, disclosure statement, sale motion, or confirmation order had been filed as of July 2026. The court twice extended exclusivity; most recently, on June 12, 2026, Chief Judge Owens extended the exclusive plan-filing period through July 20, 2026 and the exclusive solicitation period through September 17, 2026. Before that period lapsed, the debtors on July 20, 2026 moved for a third extension, seeking 70 more days on each deadline — plan-filing exclusivity through September 28, 2026 and solicitation exclusivity through November 27, 2026 — noticed for a September 15, 2026 hearing. The motion states that under Delaware Bankruptcy Local Rule 9006-2, its timely filing automatically keeps the existing periods in force until the court rules, leaving the case's path to a plan tied to the outcome of the ground-lease litigation.
Key Timeline
Date
Event
1997
Morgan Hotel Group purchases the building for $125 million
2000
Reopens as "The Hudson" after Schrager/Starck $125M renovation
November 2020
Hotel closes permanently; Eldridge acquires from sbe
May 2022
Montgomery Street Partners purchases for $207M; CSC signs 99-year ground lease and Parkview provides $207M mortgage
June 2022
Interior demolition begins with SRO tenants in place
September 2023
HPD finds "reasonable cause" of tenant harassment
February 2024
NYC DOB issues partial stop-work order
March 2024
Ground rent increased to $8.75M/year via Fourth Amendment
November 2024
Loan maturity default on Parkview financing
December 2024
$4.58M settlement of $17.3M union pension liability
June 30, 2025
Parkview sues Smeke brothers for mismanagement
July 25, 2025
UCC foreclosure sale; Parkview credit bids $80M for equity
August 7, 2025
Settlement and Release Agreement
October 22, 2025
chapter 11 petitions filed
November 17, 2025
Interim DIP order entered ($12.27M)
November 25, 2025
Official Committee of Unsecured Creditors appointed
December 22, 2025
Recharacterization adversary complaint filed
December 26, 2025
Ground lessor moves to convert or dismiss case
January 9, 2026
Committee obtains Rule 2004 discovery order
January 13, 2026
Court denies DLA Piper special-counsel retention
January 14, 2026
Final DIP order entered; ground lessor withdraws dismissal motion
Frequently Asked Questions
Why did the Hudson Hotel entities file for bankruptcy?
The entities filed after Parkview Financial foreclosed on the equity interests in July 2025 following construction stoppages and regulatory complications. A stop-work order tied to harassment allegations involving 32 SRO tenants halted construction, the ground lessor threatened lease termination, and the debtors sought chapter 11 protection to recapitalize and continue the residential conversion.
What happened to the original developers, CSC Real Estate?
CSC Real Estate, led by Alberto and Salomon Smeke, was removed after Parkview foreclosed on CSC's equity through a UCC sale in July 2025, credit bidding $80 million. Parkview had sued the Smekes in June 2025 alleging "gross mismanagement," claims the developers called "completely unfounded" while alleging Parkview failed to fund the project properly.
Why is Parkview Financial's role as both owner and DIP lender contested?
After foreclosing on the equity in July 2025, Parkview became 100% indirect owner through its affiliate PV Hudson LLC while also serving as DIP lender. The DIP facility, originally $32.76 million, was upsized to $43.54 million in April 2026 over a committee objection, and the committee has pursued Rule 2004 discovery into Parkview's prepetition conduct.
What is the ground-lease dispute and why is it on appeal?
The debtors seek to recharacterize the 99-year ground lease as a disguised financing arrangement, and separately won an April 2026 ruling that, if it is a true lease, it is residential under section 365(d)(2). The ground lessor obtained certification of a direct appeal of that ruling to the Third Circuit, where the residential-versus-nonresidential classification will be decided as a pure question of law.
How much post-petition rent must the debtors pay?
That is disputed. Leveraging the residential ruling, the debtors argue their administrative-rent obligation should be capped at the SRO base rents the estate actually collects rather than the $729,166.67 monthly contract rent. The ground lessor demands the full contract rent plus roughly $2.58 million in accrued additional rent, and on July 2, 2026 moved to compel the debtors to draw on the DIP facility and escrow the disputed rent. The court heard argument on the escrow request on July 16, 2026 without ruling, and the underlying rent motion remains set for a September 9, 2026 hearing.
What is a Certificate of No Harassment and why does it matter?
Under NYC's Local Law 1 of 2018, owners must obtain a Certificate of No Harassment verifying no tenant harassment occurred before receiving permits for demolition or change of use. The project's initial application was denied after HPD found harassment, legally requiring work to stop on occupied floors, with a five-year alteration moratorium typically applying unless the owner enters a Cure Agreement.
Who is the claims agent for Hudson Hotel?
Kurtzman Carson Consultants, operating as Verita Global, serves as the claims and noticing agent. The court-authorized role anchors creditor notices and claims-register administration; under the March 2026 bar date order, the general claims bar date was April 6, 2026 and the governmental bar date was April 20, 2026.
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This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. Read our full disclaimer.
