By JAMES FINK
Business First

The prospective new owners of the Statler Towers in downtown Buffalo have officially delivered a required $261,000 advance payment on the landmark building, albeit 26 days late.

The check from New Buffalo Statler Redevelopment LLC was delivered in the middle of a U.S. Bankruptcy Court hearing Wednesday in a Hollywood-like moment. Its delivery clears the way for New Buffalo to complete its twice-delayed closing by the Nov. 30 court-imposed deadline. With the check, New Buffalo Statler has invested more than $750,000 in the building - including $500,000 toward the $1.3 million purchase price.

"We're happy this was worked out today," said Garry Graber of Hodgson Russ LLP, special counsel to court-appointed trustee Morris Horwitz. "It makes it much more likely this deal will close. The trustees have a new level of confidence."

Adding a note of drama, a small portion of the building's facade fell to Delaware Avenue just a few hours after the court hearing. Pieces of decorative concrete came crashing down to Delaware Avenue just after 8 p.m. Wednesday, closing streets around the building. Fire officials estimate that somewhere between 200 and 300 pounds of debris covered the southwest corner of Delaware Ave. and Mohawk St., which is occupied by a bus shelter and three mailboxes. As of Thursday, some loose concrete remained on upper floors of the building. Officials said no one was injured.

The good-faith payment was offered a month ago as New Buffalo asked to have the closing date delayed by 60 days, moving it to Nov. 30. The payment was due Oct. 2, but on Oct. 16, a surprise stop-payment order was issued by the Connecticut-based investment group that had forwarded the money to New Buffalo.

The new payment was promised Monday in a court session and was due to be delivered by 5 p.m. Tuesday. It didn't arrive until Wednesday morning as the lawyers were huddling.

"People wouldn't have put into this and put at risk unless they were confident in the deal," said Damon Morey LLP's William Savino, attorney for New Buffalo.

Earlier in the day, delivery of the check remained in doubt and there were hints that Horwitz might have pushed for declaring New Buffalo in default of its bid - a move that would have seriously clouded the Statler's future.

There was also a last-minute demand from Horwitz that the trustee's fee be increased by $50,000 to cover the extra issues attached to the sale closing, including the delay of the good-faith payment. Initially, New Buffalo's legal team, headed by Savino, balked at the figure.

While other attorneys were discussing Statler matters with Bankruptcy Judge Hon. Carl Bucki, Savino was seen passing new figures back-and-forth on a yellow legal pad among himself, Graber and Horwitz. In a matter of minutes, they agreed to a $30,000 additional fee to be included in the final closing costs.

New Statler, a development group headed by William Koessler, Richard Sterben and Tom Zawadzki, is planning a dramatic $100 million face lift of the Statler, converting it into a mixed-use facility anchored by apartments, a hotel, office space, restaurants, a jazz club and Koessler's Park Lane Catering operations.

The Statler's fate has been in question since it was placed into involuntary Chapter 11 protection earlier this year by Bucki. The Statler's current owner, BSC Buffalo Development LLC, and its principal, British investor Bashar Issa, are facing legal and financial issues in Buffalo and in Manchester, England.

Raymond Fink, who represents Mohmoud al Issa, Bashar Issa's father, has been openly critical of New Buffalo's road to closing on the deal.

"This case is turning into a circus of sorts," said Fink. "This is borderline insane."

Al Issa alleges that he holds a $4.5 million mortgage on the building. That claim is being challenged.

Bucki said extra latitude must be given to the Statler because of its landmark status and its towering presence over Niagara Square.

"It is an irregular process, but it is an irregular kind of asset," he said. "The court is well aware of the problems of this case from the beginning. It is in the best interest of everyone that the conditions are approved as presented.

Elizabeth Carey contributed to this report.