A federal court judge last week blocked a rescue loan in the Neponset Wharf bankruptcy case in laying out concerns that the lender for the Port Norfolk waterfront project is related to the borrower, leaving the high-profile development without financing as the team faces a key hearing later this month.

In a July 2 proceeding in Post Office Square’s McCormack Court House, Judge Janet Bostwick and the federal bankruptcy trustee, Justin Kesselman, gave CPC Ericsson, controlled by City Point Capital’s Ryan Sillery, until July 23 to define and further disclose elements of the relationship between lender Chris Anderson of Dorchester’s Boston Trust, and the court-approved filer of the bankruptcy, Brian Anderson of Dorchester’s Rise Development III.

The men are cousins and have been involved in businesses together in the past, including Capital Finance LLC, where they are both listed as directors of the company.

“I’ve had the opportunity to read through all the objections and I share a number of concerns that need to be addressed…We need more. It’s not going to go forward today,” Bostwick said at the outset of the hearing.

“The debtor simply says the debtor’s evaluation is $20 million [for the property],” she continued. “There needs to be more. It can’t just be recited as what the debtor thinks. I am concerned about the familial situation of the lender and that relationship…The debtor hasn’t drawn out what it’s game plan is…It’s almost as if this is the end plan.”

CPC Ericsson declared Chapter 11 bankruptcy in May just hours before a public sale of the property on site was to commence, postponing the auction and setting a process in place to resurrect the 120-unit residential marina project on underutilized waterfront property next to Venezia Restaurant.

A June 17 hearing before Bostwick resulted in the case only narrowly moving forward after Brian Anderson came forward that day to authorize the filing, which Kesselman contended was necessary because Sillery wasn’t authorized to file alone.
Simultaneously, Brian Anderson and CPC Ericsson produced a letter of intent to borrow $1.25 million from Boston Trust to pay “approved architecture, attorney, and engineering expenses.”

However, New Jersey’s Unitas Funding, the main lender for Neponset Wharf, objected to the loan, alleging that the Andersons were related, and connected in other business dealings, and that the terms of the $1.25 million loan were 16 to 20 percent interest. The deal also set their $10 million loan subordinate, or behind, the Boston Trust loan in the financial pecking order.

“CPC is not viable with current management [under] the proposed financing and that is not expected to change,” alleged the Unitas filing from June 28. “Debtor is merely choosing to allow its friends and family to feast on the dead company before it must ultimately allow the Department of Revenue, the City of Boston, and Unitas to divide what remains.”

The filing also said that the budget submitted “requires thick rose-colored glasses to be believable” and that the proposed loan appears to be insufficient.

Attorney Gary Cruickshank, who represents CPC Ericsson, said they have a plan to obtain a Chapter 91 permit and then move ahead on engineering the project to avoid more delays. He said they have recently provided a 16-week budget allocation, though that hadn’t been submitted to the court by July 2.

“The game plan would be to use this financing until the final permit is completed,” he said. “Then we would be able to put in a plan that possibly sells a portion of the project at the marina or refinances the entire project with additional borrowing because all permits would be brought together. I do agree more information is needed.”

Kesselman agreed with Unitas’s objection and suggested that the loan not be approved for saving the project. Bostwick agreed and said there needed to be more disclosure on the property valuation and budget for getting the project solvent.

“We need affidavits and maybe an evidentiary hearing on what [this relationship] is so I can make a determination based on evidence,” she said. “They didn’t look any further [for financing] and went to the same person they are maybe doing other work with. A wink is as good as a nod. Is it, ‘I’ll charge you 16 percent on this one, but maybe 10 percent on the other one we’re working on’?…These are things that need to be more fully explained.”

Supplemental filings in the case are due by July 15, and a crucial hearing on the matter will be held July 23.