Judge OK's loan for Church Street

» February 27,2007 - Orlando

Judge OKs loan for Church Street
Developer Cameron Kuhn's $500,000 loan will keep the complex open. He also offered $40M to buy it.

Sara K. Clarke
Pedro Ruz Gutierrez and Scott Powers, Sentinel Staff Writers


The businesses at Church Street Station will be able to keep the lights on and the patrons coming in, after a bankruptcy judge approved financing Monday for the complex that, until recently, was controlled by Orlando businessman Lou Pearlman.

The loan -- approved at $500,000 -- is intended to pay the bills until attorneys can secure a buyer for the downtown Orlando complex. FF Station LLC, the company that owns Church Street Station, filed for Chapter 11 bankruptcy on Feb. 20.

After several banks and lenders declined to offer financing, developer Cameron Kuhn said he is willing to put up a 60-day loan for up to $750,000, at 15 percent interest with a 2 percent lender's fee. He also filed a letter of intent Monday expressing his desire to buy the former tourist mecca for $40 million.

"Clearly this is what we call a loan to own," Roy Kobert, Kuhn's attorney, said in court. "We truly believe that without our funding . . . Church Street would go dark."

The financing will pay expenses such as maintenance, utilities and security, and will provide paychecks to the remaining nine employees at the complex, most of whom have not been paid since Feb. 4. Elizabeth Green, FF Station's bankruptcy attorney, told Judge Arthur Briskman that the company has only $2,400 in the bank.

Whether or not Kuhn will get to buy the property will be decided at a March 27 auction. Other buyers are reported to be interested in the property, which was sold for $15.85 million in 2001.

But with about $32 million owed to secured creditors and about $6 million in unsecured debt, the $40 million offered by Kuhn will just about cover the company's liabilities.

And those liabilities could grow.

A court-appointed receiver for three other Pearlman companies is expected to ask for control of more of the boy band mogul's business entities in state court today. That could bring more than 1,000 investors -- who have put at least $317 million into a savings and stock program run by Pearlman's Trans Continental Airlines -- into the picture, an attorney for receiver Jerry McHale said.

"What we're trying to do is get some money for the savings investors," said Michael Markham, McHale's attorney, who acknowledged the potential recovery "is not going to be a significant distribution."

Pearlman faces a host of lawsuits in federal and state courts. He also has more than $33 million in judgments against him.

Meanwhile, state and federal law-enforcement agencies continue their investigations into allegations of securities fraud and Pearlman's banking practices.

About Kuhn Companies

Customer service is truly important to us and we strive daily to make sure each building and every space is perfect for our tenants and their guests. Kuhn Management has been adding to the development of Orlando for the last twelve years by purchasing old, rundown properties and turning them into unique buildings with distinct personalities.

Our goal is to create spaces that allow our tenants to be successful by creating an atmosphere that allows them to focus on their businesses without worrying about the buildings.