Update 11/17/15 – A federal bankruptcy judge has ruled in favor of allowing MCD Sports to buy Parkway Lanes from its landlord for $3 million and then sell the property to The Alan Mruvka Co. for $3.875 million. The move will allow MCD Sports to use the profit to pay its creditors and enable Mruvka-owned StorageBlue to pursue converting the building into a self-storage facility, according to the source.
The ruling was made by judge Rosemary Gambardella in U.S. District Bankruptcy Court in Newark, N.J. Property owner JCB Realty had initially opposed the sale, citing a loophole in the sale agreement that would have allowed Mruvka to back out of the deal, but withdrew its objection after the court ruled the property would return to JCB at midnight on May 2 if the transaction isn’t completed by the deadline. The sale to Mruvka is expected to close on May 2, the source reported.
The deadline of the sales transaction will enable the bowling alley to stay open until May. About one-third of New Jersey’s bowling alleys closed between 1998 and 2013, according to the source.
10/15/15 – StorageBlue LLC, a New Jersey-based self-storage operator, may convert a bowling alley in Elmwood Park, N.J., into a self-storage facility. Company owner Alan Mruvka, who co-founded E! Entertainment Television, has offered to purchase the building at 200 U.S.-46 that’s currently home to Parkway Lanes to help business owner MCD Sports LLC get out of bankruptcy, according to the source.
Under a proposal filed on Sept. 15 in U.S. District Bankruptcy Court in Newark, N.J., MCD Sports would exercise an option in its lease to purchase the 50-year-old building from landlord JCB Realty for $3 million, the source reported. The Alan Mruvka Co. would pay MCD $3.8 million to purchase the property, enabling MCD to pay off its debts. MCD would then lease the property from Mruvka’s company until its lease expires on March 31. The court papers didn’t say what would happen after the lease expires.
JCB Realty opposes the plan and the possibility of turning the building into a self-storage facility. It has urged the court to reject the sale, calling it a “disruption of services to the debtor's customers and the more than 1,000 bowlers that participate in the leagues in Parkway Lanes,” according to court papers. “The debtor believe that an orderly auction sale of the property will yield an outstanding and prompt conclusion in this matter."
The court set an Oct. 15 deadline to allow any other parties interested in buying the property to file bids.
JCB claims the purchase structure violates the sale procedure outlined in the lease. It has until Oct. 22 to outline its objections for the court, the source reported. "As the landlord, we have certain objections, which will be filed with the court and will be vigorously argued by us," said Richard Honig, the attorney representing JCB Realty.
When MCD filed for bankruptcy in July, it said it would keep the bowling alley open for business. Claims against the company total about $600,000, the source reported. MCD has made monthly payments of $335,000 to keep its option to purchase the building open, and the funds can be applied to the acquisition price. Once MCD pays the remaining $2.6 million to acquire the property and has sold it to Mruvka, it will have about $1.2 million to settle its debts. Any surplus would be directed to the company’s principals, according to court papers.
MCD hired two real estate brokers over the past two years to attract buyers for the property before it filed for bankruptcy. Although the parcel covers 3.5 acres, the entrance is only about 30 feet wide, making it difficult for entry, according to one of the brokers, Neal Patel, a partner with Ace Hotel Brokers. This limited the number of buyers, but makes the property suitable for a self-storage facility, he told a source.
Howard Koval, a broker with TJ Gustenhoven Real Estate Inc. told the source he may have found a buyer who’ll submit a bid by the deadline. The potential buyer would use the property for a “sports-related” business, but not a bowling alley.
The court will hear objections to the purchase plan at an Oct. 29 hearing as well as confirm the successful, eligible bidder if the sale moves forward.
StorageBlue launched in April with four self-storage properties in the New Jersey communities of Hoboken, Jersey City, Newark and Union City. Last summer, it refinanced its portfolio by securing a $31.25 million loan to help fund its plans for national expansion. The company also launched a Web-based television channel on YouTube called StorageBlueTV that features a variety of shows related to self-storage, celebrities, do-it-yourself home projects and flea markets.
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