CHARLOTTE, N.C. -- The messy divorce between the EpiCentre’s new owners and the developers who created the uptown entertainment project has been finalized, despite a fight by one developer to delay the split.
A federal judge on Thursday ordered developer Afshin Ghazi to immediately sign documents giving up all ownership interests he still had in the complex, which will be a focal point during next week’s Democratic National Convention.
Ghazi and developer George Cornelson III signed a settlement agreement in February with Blue Air 2010 LLC, a group of investors who bought the EpiCentre’s loan while it was in Chapter 11 bankruptcy protection.
Under the agreement, which is under court seal, Cornelson and Ghazi were to relinquish all ownership and ties to the complex at Trade and College streets. Ghazi, however, retained ownership in EpiCentre Theater Partners, a limited liability company that owns the movie theater, Mez Restaurant and Kazba nightclub.
Blue Air last month asked U.S. Bankruptcy Judge George Hodges to force Ghazi to sign documents transferring his control. Despite hours of negotiations, Ghazi didn’t sign the papers.
The ownership in EpiCentre Theater Partners is even more valuable now, as an estimated 35,000 people are expected to descend upon uptown for the convention, which officially starts Tuesday.
The EpiCentre, with its more than 300,000 square feet of restaurants, bars, offices and retail, sits on the site of the old convention center and has been viewed as a key to uptown’s redevelopment. The Democratic convention will place it in the spotlight: MSNBC has signed a deal to broadcast from the first floor, and it will be an entertainment and party hub.
Located on the Lynx light rail line, the EpiCentre is diagonally across from Time Warner Cable Arena, where the convention is being held, and near the Charlotte Convention Center, where thousands of media will be working.
‘Like a shell game’
Thursday’s hearing climaxed two years of legal wrangling that began when the original lender, RegionsBank started foreclosure proceedings in 2010. Soon after, Ghazi put the two development companies that owned the EpiCentre into Chapter 11 bankruptcy protection. Blue Air bought the project’s $94 million construction loan in fall 2010.
The two groups had been close to making a deal where Ghazi could retain an ownership stake, but that fell apart in fall 2011 when Blue Air filed court documents saying Ghazi falsified financial records.
At one point Thursday morning, the judge left the courtroom telling the two sides they had half an hour to reach an agreement. The attorneys on each side chatted mostly among themselves.
Ghazi signed the documents later in the hearing on the judge’s orders.
“We have finally gotten the benefit of our bargaining. That is Afshin Ghazi out of the EpiCentre,” Pearce told the Observer when the hearing was over.
Ghazi and his attorney declined comment.
During the hearing, Ghazi’s attorney, Rich Fennell, said Ghazi has been “always willing to do what the settlement agreement says.” Ghazi’s attorneys have argued that Ghazi couldn’t sign because there were other parties, such as those with minority interests, involved.
Complicating the case, since the EpiCentre’s inception Ghazi set up nearly 100 limited liability companies that were involved in some way with the EpiCentre’s ownership and management, according to court documents and people familiar with the project.
These companies’ members included Ghazi, his relatives and other insiders, and some bore names inspired by the Monopoly board game, including Marvin Gardens and Baltic Avenue. The court-appointed trustee who has been overseeing the EpiCentre’s operations is still unraveling the relationships.
Blue Air attorney Brad Pearce also talked to the court about $1 million Ghazi is to pay the EpiCentre trustee, who will use the money to pay unsecured creditors. The settlement agreement calls for Ghazi to sign over deeds of trust on his South Park-area home and The Ghazi Cos. South Park office as collateral. But Ghazi has transferred the deed of trust on his home to his wife, which the recently wed Ghazi told the court was part of a pre-nuptial agreement. Ghazi transferred another piece of property to his mother, preventing Blue Air from placing a lien on either real estate, Pearce said.
In ruling that Ghazi must sign the settlement-related documents, the judge said: “There’s too much property moving around like a shell game.”
Theater’s rent at issue
The papers signed Thursday don’t address one remaining issue: That involving the movie theater not paying rent this year and how it spent some of its money after the settlement agreement was signed.
Pearce argued Thursday that Ghazi and the movie theater earned profits they shouldn’t have, because the theater hasn’t been paying rent. Such rent could run about $50,000 monthly, filings show. Blue Air has said in court that Ghazi retained control of the company’s checkbook and made “fraudulent” distributions to himself and others of around $160,000 roughly one week after the settlement agreement was signed.
Blue Air has filed a separate lawsuit to deal with the movie theater’s rent and payments. Fennell told the court Ghazi plans to defend it. A trial in that case is scheduled for early November.
“It’s over,” EpiCentre co-owner Geoffrey Curme said when the hearing was finished. “Except for the rent.”