DEARBORN — Burton-Katzman’s (B-K) affiliates, West Village Commons, LLC, and Westminister Homes, LLC, filed for bankruptcy under chapter 7 provisions on Aug. 26, days before B-K was ordered to pay the city of Dearborn a $5 million court- ordered payment for the unbuilt development project in west Dearborn.

A preferred development agreement approved in 2003 stated that B-K was to construct two mid-rise buildings on the site between two parking decks on West Village Drive, east of Military Street. B-K was also expected to construct 48 condos in the West Village Square complex off of Mason, south of Michigan Avenue, but only 36 were completed. Although bankruptcy has been filed, the city still plans on holding the individuals and other entities behind B-K responsible for the payment and other court orders. The city is accusing Peter Burton, Robert M. Katzman, Charles DiMaggio, Laurence R. Goss and Steven Bentley of being accountable for the   financial damage suffered by the city.  According to a statement issued by the city, filing for bankruptcy was a tactic the companies used to avoid making the $5 million payment of a comtempt fee that was due on Sept 1. The contempt fee is equivalent to the accumulated debt service on the city’s bonds issued in connection to the construction of two parking decks. The debt service is $5 million. The decks cost more than $12 million. The city constructed them to accompany the never-built development project. In May, B-K and other related companies were ordered to pay the contempt fee by Sep. 1 for not starting construction on the project by the court ordered deadline of April 3, 2010.

In November 2009, B-K and some of its affiliated companies were ordered to begin construction on the West Dearborn project by April 3, 2010 and complete the project by July 2011. When the companies failed to begin construction by April, 3rd Circut CourtJudge Michael Sapala ordered the contempt fee to be paid on Sept 1. In May, the judge ordered B-K to begin construction on the project by Oct. 1, 2010 or face additional penalties during a hearing scheduled on that date.

The city is still pushing to have the Oct. 1 hearing proceed. “It’s unfortunate that this situation has come to this.  Regardless of the outcome, there are no winners. Hopefully the parties can quickly resolve this issue, so we can focus on attracting a development to the area that will invigorate downtown West Dearborn and increase revenue to our local merchants,” Dearborn Chamber of Commerce President Jennifer Giering said.