The landlord of the former Navy hospital in North Charleston filed for bankruptcy protection this week to fend off a creditor seeking control of the building, adding a fresh wrinkle to the stalled, 10-story revitalization project.
Chicora Life Center LLC followed up that legal maneuver by suing Charleston County on Tuesday for canceling its lease for three floors in the mostly vacant 400,000-square-foot structure.
The company has debts totaling more than $22 million, according to a filing with the U.S. Bankruptcy Court in Columbia late Monday. Most of that is owed to two lenders.
The bankruptcy petition temporarily halts any collection efforts by creditors and other legal actions.
The redevelopment of the former hospital into a one-stop health and social services hub was supposed to kick-start other revitalization efforts in that blighted area of North Charleston.
But the privately funded project has been hampered by renovation delays and, more recently, litigation.
Chicora Life was hit with a foreclosure lawsuit in March by lender UC Funds, three weeks after the scheduled payoff of a $13.9 million loan came and went.
The Boston-based financier then asked a local judge to appoint an outside receiver to ensure its collateral did not deteriorate. Chicora Life filed for bankruptcy protection to block any changes in management, its lawyer said Tuesday.
“We felt that was not in the best interest for all of the parties involved in the estate,” Columbia attorney Bill McCartney said of the request by UC Funds.
The former 175-bed hospital opened in 1973 to serve the Charleston Naval Base and Shipyard, and it once employed more than 1,200 workers. Operations were scaled down after the base closed 20 years ago, and the building was vacated in 2010. The site includes about 24 acres and parking for about 900 vehicles.
Chicora Life’s parent company bought it from the city for $5 million in 2014. About $20 million has been invested in the building, according to a court document. Chicora Life this week estimated the value of the property to be about $48 million, citing an appraisal completed within the past year.
UC Funds said just one tenant — Alcoholics Anonymous — currently occupies space in the building. The lender also said that other renters are unlikely to move in because Chicora Life failed “to fulfill its obligations with regards to the work” that was required under their leases.
Charleston County was supposed to be the anchor tenant. It agreed to lease more a quarter of the building for 25 years but it never took occupancy. County Council voted 5-3 to terminate the rental agreement in March.
In its lawsuit Tuesday, Chicora Life alleges the county improperly nixed the deal and is seeking unspecified damages and payment of its legal fees. A spokesman for the county did not respond to a request for comment Tuesday.
Chicora Life filed a separate complaint involving another would-be tenant May 6, alleging Fetter Health Care Network failed to move in and start paying rent in January.
In the bankruptcy case, the lawsuits are viewed as potential assets because they could lead to financial settlements. The court-supervised restructuring process could enable Chicora Life to renegotiate its loan terms.
The company is subsidiary of Chicora Garden Holdings, which is listed as the owner of the former Navy hospital. Its principal is Utah lawyer and developer Douglas Durbano. Donald Trump Jr., son of the presumed GOP presidential candidate, is a passive, minority investor in the venture.
Contact John McDermott at 843-937-5572.