By JAMES FINK
Business First

In what was viewed as a partial victory for both National Fuel Gas Corp. and the tenants of the financially troubled Statler Towers, a bankruptcy judge ruled Thursday afternoon that natural-gas service at the Delaware Avenue landmark must stay on at least for a few more weeks, and that the utility is entitled to payment for current service.

U.S. Bankruptcy Court Western District of New York Chief Judge Hon. Carl Bucki made his ruling following more than three hours of testimony that included impassioned pleas from the Statler's tenants. The hearing was the first since Park Lane Catering LLC, one of the building's anchor tenants, forced the Statler's owner, BSC Development Buffalo LLC, into involuntary Chapter 11 proceedings last week.

Bucki was hearing motions brought by National Fuel Gas, which is seeking payments for both past and current services. The Amherst-based utility is owed $208,659 in gross pre-bankruptcy debts by BSC Development.

National Fuel Gas had initially sought $115,000 in post-bankruptcy payments, but during the court session said it was willing to accept $5,000 per week in payments.

Bucki ordered that National Fuel Gas may read the building's meters on April 24, and is then to receive payment for those services by May 4. If no payment is made, then National Fuel Gas may proceed with shutting down service to the Statler, he said.

Bucki areed that a trustee should be appointed to oversee the Statler and should, along with others connected with the complex case, meet in his courtroom on April 23. Bucki is also expected to rule on whether the involuntary bankruptcy proceeding involving the Statler can continue.

The 18-story, 550,000-square-foot Statler has just 25 tenants today and is losing nearly $80,000 a month. The building is owned by British investor Bashar Issa, who has not been in Buffalo in more than one year. Issa is facing financial and legal issues in Manchester, England.

"We are dealing with a debtor who chooses not to appear or be present," Bucki said.

State Supreme Court Justice Hon. John Curran, who is hearing another case involving Park Lane Catering and Issa, has twice held the investor in contempt of court. Issa is facing daily fines of $250 on each charge.

Park Lane Catering owner William Koessler is working with a team of Chicago-based investors who want to buy the Statler and begin a $70 million restoration effort. The Park Lane has more than 200 events booked for the Statler, ranging from weddings to corporate affairs. The Park Lane has lost more than $1 million in bookings, the caterer reports, because of the Statler's shoddy shape.

Issa had pledged to make more than $100 million in renovations when he bought the Statler three years ago. Only a limited number of those took place, and no renovation work has occurred since last spring.

William Brown, a partner in the Phillips Lytle LLP law firm who is National Fuel Gas' legal representative in the case, urged Bucki to help bring a resolution to the case.

"It is in the best interest of National Fuel and all parties to resolve this," Brown said.

"We continue to work hard on behalf of our customers to assure that we receive payment for services received at the Statler," added Julie Coppola Cox, National Fuel Gas spokeswoman.

Bucki ordered that either BSC Development or the court-appointed trustee make weekly payments to National Fuel beginning May 4. The payments will come from rents collected by the trustee.

"Regular ongoing payments are to be paid," Bucki said.

The judge, reiterating what others have said, fears that a prolonged period of uncertainty will only continue to harm the Statler. The building needs nearly $5 million in immediate repairs, including facade work.

Julia Kreher, an attorney from Hodgson Russ LLP who is working with Park Lane Catering on BSC's involuntary Statler bankruptcy proceeding, said her client is "sympathetic towards National Fuel."

Kreher said the trustee is needed, if not essential.

Curran in March named Buffalo businessman Stephen Leous as interim receiver in connection with the Park Lane lawsuit. Leous has been named as a possible trustee for the building's bankruptcy proceedings. Leous was out of town and unavailable for comment.

Any trustee must be vetted by federal officials.

"A Chapter 11 trustee is needed to step in and stabilize the situation," Kreher said.

Kreher said the involuntary Chapter 11 proceedings may make it easier to sell the Statler.

Koessler has repeatedly said he and his investors remain frustrated by the inability to strike a purchase deal with either Issa or his father, Mohmaud al Issa, who holds the mortgage on the Statler.

"What you got is nobody willing to deal and no one willing to step up to the plate," said Buffalo attorney Bruce Zeftel, whom Curran named special counsel to the Park Lane proceedings.