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November 3, 2010

ACORN files for bankruptcy; if FCR doesn't get its $1 million loan repaid, it still will have reaped far more in value from ACORN's support

Atlantic Yards Report

It looks like Forest City Ratner may not get its money back.

According to a post yesterday by CEO Bertha Lewis on ACORN's web site, the national organization, which earlier this year relaunched as separate state organizations (such as New York Communities for Change), has declared Chapter 7 bankruptcy as funding dried up in the wake of (mostly trumped-up) scandal.

Still, as I've written, it's notable that ACORN has gotten very little bad press concerning two far more legitimate issues: the cover-up of an embezzlement by its founder's brother and the $1.5 million loan/gift bailout of the national organization by developer Forest City Ratner.

Chapter 7 bankruptcy, also known as "liquidation," allows the organization or individual to keep exempt property and have the rest of the property sold by a court-appointed trustee.

The loan

According to ACORN whistleblower Anita MonCrief, the $1 million loan, half delivered 8/1/08 and the other half on 10/1/08, was granted at an annual interest rate of 4.58%, with 36 monthly payments from 6/1/09 through 5/31/11. If ACORN missed payments, after 30 days the interest rate would rise to an annual rate of 18%--an interest rate that alarmed some ACORN board members.

How much of this has been paid back? We don't know, but the bankruptcy filing hints that FCR didn't get repaid.

Then again, the developer has gotten well more than $1.5 million value out of ACORN's and Lewis's support for Atlantic Yards, given the importance of ACORN in getting official approval of the project at the size requested.

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Posted by eric at November 3, 2010 10:32 AM