Update: Vestavia Hills City Center in Foreclosure, Lawsuit Ensues

Posted on August 11, 2010

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In May, we discussed the story of troubled AIG Baker as it struggled to regain both the Vestavia Hills City Center and Patton Creek shopping centers once both properties were put in foreclosure.

At present Propst Properties of Huntsville holds the note on Vestavia’s City Center , but Alex Baker of AIG Baker is taking the company to court in an effort to regain ownership and control of the shopping center. In April, he put the property in foreclosure to halt Propst’s intended sale of the City Center.

According to the Birmingham Business Journal, Baker believes that Propst “was acting in bad faith, claiming the assignment of the note was not valid and Propst knew of AIG Baker’s financial condition before the sale.”

However, Propst has plenty of claims of their own, including the accusation that “this is a wholly inappropriate use of bankruptcy – using bankruptcy as a sword rather than a shield.”

According to the Business Journal, Propst believes that AIG Baker had enough capital to pay its debts and that this foreclosure was designed to “force a sale of the note at a greatly reduced price to AIG Baker’s CEO Alex Baker, since he’s not personally the guarantor of the debt.”

Propst claims the foil to Baker’s plan was that he wanted 90 days to purchase the City Center’s note from the bank, while Propst was more than happy to close the deal before that. He added that “bankruptcy relief wasn’t designed to prefer one purchaser over another.”

We will keep you posted on developments in this case.

Brice Johnston
Goodrich Law Firm, LLC

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