A lender can foreclose on a downtown Denver office tower that filed for bankruptcy last year, a judge ruled last week.
U.S. Bankruptcy Court Judge Kimberley Tyson granted a relief of stay to Wilmington Trust, allowing the loan trustee to take possession of the 24-story tower at 700 17th St.
At the same time, Tyson rejected a reorganization plan submitted by the building’s owner, an affiliate of Denver-based Toma West.
“I’m disappointed. The judge thought Denver too far gone to believe in our plan,” Toma West founder and President Kenneth Grant said in an email.
Grant said he was referencing “arguments from opposing attorney that the judge bought and accepted.”
“This should be a message to town officials,” he said.
Toma Westap 700 17th Street LLC paid $32 million for the property in June 2016, financing the deal with a $21 million loan.
Wilmington Trust originally filed to foreclose on the building in August 2024, saying Toma West still owed $19 million in principal on the loan.
Toma Westap 700 17th Street LLC filed for Chapter 11 bankruptcy last September, days after another Toma West building in Greenwood Village did the same.
They remain the only major Denver-area office buildings to seek bankruptcy protection, despite widespread financial distress in the sector.
Bankruptcy filings automatically pause foreclosure proceedings. In February, however, Wilmington Trust asked to be allowed to resume them.
In her ruling last week, Tyson wrote that the building is now believed to be worth $6 million. Itap approximately 40% occupied and generates about $172,000 in rent each month. Wilmington Trust has been covering the resulting $50,000 loss.
Toma Westap latest reorganization plan called for paying the lender $23.3 million over 30 years, with Grant personally paying $500,000 up-front and an additional $3 million over 30 years.
At a May hearing, according to Tyson, Toma West Chief Financial Officer Leanna Bourke said that the planned conversion of the nearby 621 and 633 17th St. office buildings into apartments would increase the demand for office space in the area.
“The Court cannot find that justification to be credible. The current demand for commercial office space is low, and the Court cannot find it is likely to increase soon,” Tyson wrote.
The judge ultimately concluded that Toma Westap reorganization plan didn’t have “a reasonable prospect of success.”
Attorney Craig K. Schuenemann of Kilpatrick Townsend & Stockton represented Wilmington Trust. Jeffrey A. Weinman of Michael Best & Friedrich represented Toma West.
Wilmington Trust has also sued Grant personally, saying he guaranteed the 2016 loan.
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