On Friday, First Manhattan Developments REIT asked the Southern District of New York bankruptcy court to dismiss the chapter 11 case of 785 Partners LLC, which was filed on August 3, 2011. 785 Partners LLC owns real property known as, and located at, 306 West 48th Street, or 785 Eighth Avenue, New York, New York. A 42-story building was constructed on the property with the intent to sell 122 condominium units in bulk to take advantage of a tax abatement available under the New York City Department of Housing Preservation and Development §421-a. The developer has not obtained the requisite condominium approvals from the New York State Attorney General, however, so none of the condominium units have been sold and the building is unoccupied.

Read more about the project and the dismissal motion after the jump.

In July, First Manhattan Developments REIT acquired its claims from PB Capital Corporation, as Administrative Agent for lenders PB Capital Corporation and TD Bank, N.A., which initially provided $84 million in secured financing to 785 Partners in January 2007. First Manhattan Developments asserts it now holds a claim of approximately $101 million, but that the fair market value of the property is less than the amount of its claim.

The initial lenders began foreclosure proceedings in September 2010 and a summary judgment hearing was scheduled to occur on August 3rd but was stayed by the bankruptcy filing. First Manhattan Developments now seeks dismissal of the bankruptcy case or, alternatively, relief from the automatic stay to allow it to complete the foreclosure action. It argues that dismissal of the bankruptcy case is warranted “for several independent reasons, including: (i) the case was filed in “bad faith”, (ii) the Debtor has not, and cannot pay the expenses necessary to preserve and maintain the Real Property, (iii) the Debtor has no equity in the Real Property, (iv) the value of the Real Property is diminishing and, (v) the case was filed with no reasonable prospect for rehabilitation or reorganization.” If the bankruptcy court is not inclined to dismiss the case, First Manhattan Developments asserts that it is entitled to relief from the automatic stay because 785 Partners “has no equity in the Real Property and the Real Property is not necessary for an effective reorganization that has a reasonable possibility of occurring within a reasonable time frame.”

First Manhattan Developments REIT has noticed the motion for hearing on September 15, 2011 with an objection deadline of September 8th at 4:00 p.m.

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