A Connecticut luxury apartment complex operator is seeking bankruptcy court approval to sell its 150-unit property for $62 million through a competitive auction process, following financial difficulties that stemmed from pandemic-related construction delays.
Covered Bridge Newtown, LLC and Covered Bridge Newtown I, LLC filed a motion on September 17, 2025, in the U.S. Bankruptcy Court for the District of Connecticut requesting approval of a stalking horse agreement with BDC Realty Holdings Inc. The proposed sale would include the Class A luxury rental complex located at 9 Covered Bridge Road in Newtown, Connecticut, plus assumption of a $2.5 million PACE loan.
The debtors, both owned by Anthony Lucera, filed for Chapter 11 bankruptcy protection on December 8, 2024, after facing mounting construction costs and a foreclosure action initiated by their primary lender, UC Covered Bridge MF Holder, LLC, which is owed approximately $57 million.
Property and Financial Background
The Covered Bridge complex features over 150 rented units across six completed buildings, along with amenities including a 24-hour fitness center, heated swimming pool, sun deck, and clubhouse. A seventh building remains approximately 75% complete, with construction difficulties on this final phase precipitating the bankruptcy filing.
According to court documents, the debtors originally purchased the property in May 2017 and began construction operations funded through equity contributions and various loans. The project faced significant setbacks when the COVID-19 pandemic hit during the construction phase, leading to "various construction difficulties, cost increases, and delays."
The financial strain intensified when UC Covered Bridge commenced a foreclosure action in Connecticut Superior Court on July 10, 2024. The debtors filed for bankruptcy protection to "stabilize operations, protect the interests of tenants, and maximize the value of their property for the benefit of creditors, equity holders, and other parties-in-interest."
Extensive Marketing Campaign
Since filing for bankruptcy, the debtors have conducted an aggressive marketing campaign to maximize the property's value. Working with financial advisor R.J. Reuter, LLC and real estate advisor Keen Summit Capital Partners LLP, the company has:
- Conducted 33 property tours with interested buyers
- Executed over 270 non-disclosure agreements
- Launched five email campaigns reaching more than 75,000 investors and brokers
- Received seven letters of intent for offers exceeding $50 million
- Generated significant online interest with nearly 21,000 views on CoStar/LoopNet alone
The marketing efforts also included coverage in multiple news publications, including the Hartford Business Journal, News-Times, Multifamily Drive, and CT Insider.
On August 29, 2025, the debtors signed a letter of intent with BDC Realty Holdings for $62 million plus assumption of the PACE loan, representing the highest offer received to date.
Transaction Terms and Bidding Process
Under the proposed stalking horse agreement, BDC Realty Holdings has made a good faith deposit of $3.1 million, representing 5% of the cash purchase price. The company would acquire all real property, improvements, personal property, tenant leases, and certain executory contracts associated with the complex.
The sale is structured as a two-step process designed to maximize value through competitive bidding. If approved by the court, the debtors will continue marketing the property through October 20, 2025. Any competing bids must exceed the stalking horse offer by at least $1.9 million and include a deposit of at least $3.2 million or 5% of the proposed purchase price.
If qualified competing bids are received, an auction will be held on October 23, 2025. The stalking horse bidder is entitled to a $1.5 million break-up fee and $150,000 in expense reimbursement if it is not the winning bidder.
Legal Proceedings and Timeline
The debtors are represented by Green & Sklarz, LLC, with attorneys Jeffrey M. Sklarz and Joanna M. Kornafel handling the case. The motion requests court approval for the sale procedures on September 30, 2025, with the final sale approval and confirmation hearing scheduled for October 30, 2025.
The transaction is expected to close on November 14, 2025, though UC Covered Bridge retains the right to submit a credit bid under certain conditions, including if the winning bid falls below $62 million plus PACE loan assumption.
The sale will be consummated through a confirmed plan of reorganization, with proceeds distributed to creditors according to the bankruptcy code's priority scheme. The property is encumbered by numerous liens, including the primary mortgage to UC Covered Bridge, the PACE loan, municipal tax liens, and multiple mechanic's liens from contractors.
Significance for Stakeholders
The proposed sale represents a significant recovery opportunity for creditors of the Covered Bridge entities. An official committee of unsecured creditors was appointed on January 14, 2025, to represent the interests of smaller creditors in the case.
The transaction, if approved and consummated, would provide much-needed liquidity to satisfy administrative expenses, priority claims, and provide distributions to secured and unsecured creditors. The competitive bidding process is designed to ensure that creditors receive maximum value from the property sale.
The case highlights the ongoing challenges facing real estate developers who were impacted by pandemic-related construction delays and cost increases, particularly in the luxury apartment sector where financing requirements and completion timelines are critical to project success.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.