National Realty Investment Advisors, LLC's liquidation trustee has filed a motion seeking bankruptcy court authorization to approve nearly $100 million in real estate financing for three major development projects, asking the court to clarify governance questions about approval authority under the confirmed reorganization plan.
The motion, filed January 5 with the United States Bankruptcy Court for the District of New Jersey, requests approval of a $97 million financing package to fund continued development of two major residential projects in New Jersey and a mixed-use development site in Philadelphia. The liquidation trustee contends that under the plan's structure, approval from the Liquidation Trust Advisory Board is not required for financing incurred by the wind-down entities, though the matter has been brought to the court to provide clarity and certainty for all parties.
AIRN Liquidation Trust Co., LLC, serving as liquidation trustee, states that the financing is critical to maximizing investor recoveries and implementing the development strategy that was central to the reorganization plan approved by 98.2 percent of investors in 2023. The trustee estimates that developing these properties rather than selling them in their current condition could enhance investor distributions by tens of millions of dollars.
The Financing Package
The financing package consists of two components: a $54 million loan facility to refinance an existing $16 million mortgage on a completed residential tower while generating $38 million in additional capital, and a separate $43 million construction loan for a planned adjacent tower. The funds would support development of three properties that were identified as key drivers of the financial projections underlying National Realty's Chapter 11 plan, which became effective in August 2023.
The wind-down CEO began exploring refinancing options in spring 2025, obtaining term sheets from at least six different potential lenders with various structures before selecting the current proposal. AIRN Holding Co. LLC executed a non-binding term sheet for the financing on September 26, 2025.
The loan documents include express language excluding the liquidation trust and its beneficiaries from any liability and confirming that the liquidation trust's discretion to move or disburse cash, including distributions to beneficiaries, remains unimpaired and unaffected by the financing transaction. The liquidation trust would not serve as borrower or guarantor under the loan facilities, and the financing would not encumber liquidation trust assets.
The Real Estate Projects
The Grand
The completed project, known as The Grand, is a 14-story residential tower with a municipal parking garage in West New York, New Jersey. The property now holds a certificate of occupancy and reports occupancy exceeding 70 percent. Construction commenced in early 2022 after National Realty acquired the site in August 2021, and the project was successfully completed despite the subsequent bankruptcy filing and transition to the liquidation trust structure.
The Metro
Phase Two of the West New York development, called The Metro, envisions a second 14-story residential tower on an adjoining parcel. The site had been prepared during earlier development stages, but full construction was delayed during bankruptcy proceedings and the subsequent wind-down period. In October 2024, the liquidation trustee filed an adversary proceeding against the Town of West New York to preserve essential building permits for the planned development, ultimately reaching a favorable settlement that maintained the needed approvals. Construction activity necessary to maintain those permits resumed in 2025, with initial payments funded by cash held by the wind-down entities while the new financing was being negotiated.
Philadelphia Water Club
The third property is the Philadelphia Water Club, a 22-acre site along the Delaware River that National Realty acquired in 2017. The property has approvals for a three-phase mixed-use development totaling 839 multifamily residential units and up to 37,498 square feet of ground-floor commercial space with accessory parking. The wind-down CEO continues to negotiate separate financing terms with multiple potential lenders for this Philadelphia property.
Legal Framework and Governance Questions
The central legal question presented by the motion concerns the scope of the advisory board's approval authority under the liquidation trust agreement. The liquidation trustee maintains that the advisory board's approval authority is narrowly defined and extends only to actions involving liquidation trust assets themselves. Those triggering events include asset sales exceeding $250,000, litigation settlements over $500,000, and debt incurred by the liquidation trust directly.
The proposed financing, the motion argues, would be incurred by special purpose entities owned indirectly by AIRN Holding and secured solely by real estate owned by those entities, with no liability or obligation imposed on the liquidation trust itself. The wind-down entity borrowers include Culver Urban Renewal Redevelopment II Propco LLC, 2044 West First Capital Propco LLC, 3rd Street Capital 200-210 Propco LLC, 3rd Street Capital 203-215 Propco LLC, and Culver Urban Renewal Redevelopment I Propco LLC.
The wind-down entity operating agreements require approval from the liquidation trustee for any debt incurred by wind-down entities, according to the motion. The agreements expressly contemplate that the wind-down CEO may obtain third-party financing with respect to real estate assets subject to the prior approval of the liquidation trustee. Other provisions in those same operating agreements that do require advisory board approval, such as removal or replacement of the wind-down CEO, include explicit language to that effect.
Development Strategy and Plan Implementation
According to the motion, National Realty's confirmed plan explicitly contemplated post-confirmation development of its real estate portfolio rather than immediate liquidation sales. The plan vested the properties in newly-formed wind-down entities specifically to facilitate orderly completion, development, and monetization in a manner that would maximize stakeholder value. The continued development and ultimate sale of the remaining real estate assets was identified as the primary driver of projected investor recoveries under the plan.
The plan and disclosure statement underscore that the creation of the wind-down entities served a strategic purpose central to investor recoveries. The wind-down entities are vested with authority to implement development initiatives, manage construction, enter into joint venture agreements, and execute sales transactions, ensuring that these projects are completed and monetized in a manner that maximizes value for stakeholders.
Engagement Process
Throughout the process, the liquidation trustee and wind-down CEO kept the advisory board informed of their efforts and shared drafts of all operative loan documents with the board's legal counsel for review and comment.
Initial drafts of loan documents were shared with advisory board counsel on November 12 and November 19, 2025. Advisory board counsel provided extensive comments on the loan documents, and the wind-down CEO incorporated many of these comments into revised drafts. Additional revised drafts were shared on December 12 and December 17, followed by further comments from advisory board counsel on December 23.
The liquidation trustee and wind-down CEO previously consummated two earlier financing transactions: a $32 million loan to refinance another property at 4901 Bergenline Avenue in April 2024, and a $16 million loan to fund completion of The Grand in June 2024. The advisory board was kept apprised of those efforts.
Since plan confirmation, the wind-down CEO has presented the advisory board with detailed analyses of capital commitments, loan proceeds usage, and projected returns for various development initiatives. Such information has included multi-year cash flow projections on an asset-by-asset basis that contemplates the need for financing to achieve maximum returns.
Business Justification
The motion states that courts in the Third Circuit give great deference to a trustee's business judgment in administering the business of a liquidation trust where the conduct involved a reasonable business judgment within the scope of the Bankruptcy Code made in good faith. As long as the trustee can provide valid reasons for the conduct rather than arbitrary or capricious decision-making, courts will not second-guess the trustee.
The liquidation trustee asserts that its approval of the financing represents an exercise of business judgment consistent with that of the wind-down CEO. Working with financial advisors, the liquidation trustee and wind-down CEO analyzed the risks and benefits associated with the financing and concluded that funding continued development of The Metro and the Philadelphia Water Club will materially enhance and increase distributions to National Realty's investors.
The motion emphasizes that failure to secure the financing could limit the ability to develop the properties to their full potential. Developing these properties should significantly increase their value compared to as-is or liquidation sales, thereby materially enhancing distributions to stakeholders by tens of millions of dollars following continued development, sale, or other disposition.
The wind-down CEO has discussed the progression of development for The Grand, The Metro, and the Philadelphia Water Club at live town halls that the liquidation trustee has hosted every other month since plan confirmation. Those presentations are recorded and posted on the Omni website for investors to view at any time. An investor presentation on AIRN Holding's real estate development was attached as an exhibit to the motion.
Court Jurisdiction and Next Steps
The confirmed plan and the liquidation trust agreement contain provisions confirming that the bankruptcy court retained jurisdiction to resolve questions regarding plan implementation and administration. The confirmation order states that the court retains jurisdiction over all matters arising out of or related to the case and the plan, including jurisdiction to determine any matters that may arise in connection with contracts, instruments, or other documents created in connection with the plan.
Section 1142(b) of the Bankruptcy Code authorizes the court to direct the debtor and any other necessary party to execute or deliver or to join in the execution or delivery of any instrument required to effect a transfer of property dealt with by a confirmed plan, and to perform any other act that is necessary for consummation of the plan. Bankruptcy Rule 3020(d) provides that notwithstanding the entry of the order of confirmation, the court may issue any other order necessary to administer the estate.
The motion seeks confirmation that advisory board approval of the financing is not required under the plan or, alternatively, court approval of the financing to ensure that the wind-down entities may proceed with financing that will materially improve investor recoveries.
A confidential declaration from the wind-down CEO was attached to the motion and provides additional details about the financing terms, project analyses, and business justifications. The liquidation trustee indicated an intention to file a contemporaneous motion to seal that declaration to protect commercially sensitive information.
Case Details
The case is pending before the United States Bankruptcy Court for the District of New Jersey under case number 22-14539-JKS. The motion is docketed as document 4241. A hearing on the motion is scheduled for January 27, 2026, at 10:00 a.m. Eastern Time. Any objections must be filed by January 20, 2026, at 4:00 p.m. Eastern Time. If no objections are timely filed, the court may grant the requested relief without a hearing.
The motion was filed by Ice Miller LLP, with attorneys from the firm's New York and Chicago offices representing the liquidation trustee. Cole Schotz P.C. serves as co-counsel to the wind-down entity borrowers and AIRN Holding, with attorneys from the firm's Hackensack, New Jersey office.
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