Former Duke University basketball stars Christian Laettner and Brian Davis have been ordered to a Washington courtroom Friday to explain to a judge why they shouldn't be held in contempt.
If their answers don't satisfy the judge, Laettner and Davis could be sent to jail - an outcome that few could have predicted four years ago when they were basking in the success of their West Village development in downtown Durham.
Even now, as Laettner and Davis try to fend off angry creditors, West Village remains the jewel in their crumbling real estate empire. Its mixture of apartments, restaurants and offices continues to thrive, making it attractive to investors and to those angry creditors determined to pursue Laettner and Davis' assets.
Laettner and Davis have made it clear they are open to selling some, or all, of the remaining properties they own in West Village. But it remains to be seen whether the proceeds from those sales will be enough to cover the debt on the properties and repay the millions they owe creditors.
Laettner and Davis didn't return calls seeking comment this week.
Last month, Laettner, Davis and their former business partner Thomas Niemann sold one of their West Village properties for $9.65 million. The 51,000-square-foot building has been vacant for years. Duke signed a lease in 2007 to occupy the entire building once it was renovated and turned into lab space, but those renovations were never started.
Now the property is in the hands of an investment group that includes HCP, a publicly traded real estate investment trust that focuses on healthcare buildings, and Longfellow Real Estate Partners, a Boston firm that invests in life science buildings.
HCP officials didn't return a call seeking comment, but Scott Selig, associate vice president of Duke's real estate office, said demolition on the building is likely to begin in the next several months. "We don't have the exact renovation schedule at this point," he said.
Laettner's group paid $11 million for the building in December 2005. Shortly thereafter they borrowed $11.1 million from Wells Fargo, according to property records.
In buying the building, HCP and Longfellow also assumed the remaining balance of $9.6 million on that Wells Fargo loan, according to property records.
Laettner and Davis still have considerable debt on their other West Village properties, including the Powerhouse Building and the residential portion.
They are in default on a $26 million loan that their company, National Champion Real Estate, took out in December 2006, according to property records. The lender was originally IXIS Real Estate Capital, but the note has since been bought by Federal Capital Partners, a Washington real estate investment firm.
Last month, FCP loaned National Champion an additional $3.2 million.
It's unclear what FCP's plans for West Village are. The company declined to comment through a spokesman.
It's possible the firm bought the $26 million note at a discount and has decided to give Laettner and Davis more time to turn things around.
The tax value of the five properties National Champion owns exceeds $30 million.
A Maryland court has already awarded Shawne Merriman, the former NFL linebacker, a 10 percent stake in the West Village condominiums as part of a $3.7 million judgment against Laettner and Davis.
Friday's court hearing relates to a smaller judgment, $671,309, which was awarded to California investors J.D. Holdings in June. J.D. Holdings loaned Laettner and Davis' company, Blue Devil Ventures, $500,000 in November 2006 to develop property in Baltimore.
The motion asking the judge to find Laettner and Davis in contempt accuses the men of thumbing their noses at the judgment and ignoring requests to show whether they have assets to satisfy the judgment. It requests that Laettner and Davis be ordered to surrender to the U.S. Marshals office and remain locked up until they comply with the order.
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