Trump Tower project in Philly files Chapter 11

Tue Jan 8, 2013 2:05pm EST

* Holding co. seeks to avoid foreclosure, find investors

* Laments tough real estate market; says owes lender $17 mln

By Nick Brown

NEW YORK, Jan 8 (Reuters) - A Donald Trump-affiliated company formed to construct a luxury hotel and condominium complex in Philadelphia filed for bankruptcy late on Monday to prevent foreclosure by its lender.

VTE Philadelphia LP, an entity that holds the vacant land on the Delaware River slated to become Trump Tower PA, filed for Chapter 11 in New York.

Its sole secured creditor, US Bank, had previously received permission from a Pennsylvania state court to foreclose, and a sheriff's sale had been scheduled for Tuesday morning. VTE said it filed for bankruptcy to avert the auction and find investors to salvage the project.

"The debtor believes that under the aegis of the bankruptcy court, it will be able to restructure its business and prepare a plan of reorganization," it said.

VTE was established in 2005 to construct what was designed to be a 45-story luxury complex, initially slated to be completed in 2009, according to the project's website ().

But a downswing in the Philadelphia real estate market held up development, VTE said in court papers.

The company listed assets and liabilities of about $11.5 million each. It said it owes US Bank about $17 million, and estimated that its land is worth less than that.

The case is In re VTE Philadelphia LP, U.S. Bankruptcy Court, Southern District of New York, No. 13-10058.