The owner of a renovated theater along South Broadway in Denver has filed for bankruptcy to stall a lender’s plan to foreclose on it.
Sonquist LLC, managed by real estate attorney Doug Norberg and business partner Paul Yaft, filed for Chapter 11 protection Friday.
“Imminent public trustee foreclosure scheduled, automatic stay necessary to preserve estate assets,” the filing states.
Norberg and Yaft didn’t respond to requests for comment.
The pair bought the former Jewel Theater at 1912 S. Broadway for $1.6 million in December 2018, months after the closure of a climbing gym that had operated there for a quarter century.
“We spent a bunch of money fixing broken and missing plaster and redoing flooring and fixing brick and stuff,” Norberg told BusinessDen in September. “We really tried to restore it to its former glory.”
In September 2022, the pair took out a $2.3 million loan on the building and its adjacent parking lot from Bank of Denver, which was subsequently acquired by MidWestOne. Norberg said in September that he asked the bank to let the pair defer payments for a couple months so they’d have funds to install a sprinkler system.
The bank declined, but the pair stopped making payments anyway to preserve cash. The bank filed to foreclose on the property in mid-August.
Norberg said in September that he was preparing to hire a firm to do the sprinkler work and intended to secure a new loan from another bank, which would allow him to pay off the one from MidWestOne long before a foreclosure auction.
“The reasonable value of that theater is, I think, $6 million or more,” he said at the time. “It’s not like they’re at risk. They are more than adequately secured in their collateral.”
Norberg is representing the business in the bankruptcy process. Timothy Shea of Robinson, Waters & O’Dorisio is representing the lender.
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