Page 530 - WhyAsInY

Why (as in yaverbaum)
Undoing It
Q: Mr. Yaverbaum, you’ve come here voluntarily to discuss the fate of Coronet Properties Company and Coronet Capital Company, as far as you know it, and your fate as well, insofar as it relates to those entities. Let me first say that we believe that, when it comes to Coronet, you always acted properly as an attorney and, indeed, have a laudable record. We are pleased that you are helping us in this matter and note for the record that any required waiver has been obtained.
A: Thank you. I’ll try my best. I am, I should tell you, hazy on some of the dates.
Q: Let’s start with some context. What was going on in the real estate world in New York in the late 1980s?
A: The real estate market, which had been booming during the earlier part of the decade, went into a deep recession in both New York and the country at large.
Q: And how was the market for co-ops in New York affected?
A: It was generally considered—correctly, it turns out—to be a
disaster, a disaster that was likely to endure for years.
Q: What would happen to sponsors when the sales of cooperative units slowed appreciably?
A: Sponsors depended upon cash from the sale of their apartments to help cover the maintenance that they owed to the cooperative corporation with respect to unsold apartments. They also depended on that cash to pay debt service on their bank loans.
Q: And if there were not sufficient cash to pay the maintenance?
A: In many cases, real estate taxes and mortgage payments to the banks that held mortgages that were secured by the co-ops’ land and
buildings were therefore in danger of not being paid. • 512 •