Art Factory owner files for court protection
Plans to operate during bankruptcy proceedings
By: Joe Malinconico
Paterson Press
PATERSON - Facing foreclosure, the owner of The Art Factory -a complex of 19th-century mill buildings near the Great falls now used for weddings and other banquet hall events - filed for bankruptcy in August. [2024]
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Mayor Andre Sayegh, who held his first inaugural ball at The Art Factory in 2018, tout4ed the eclectic arts and events business as an important part of the Great Falls area's revitalization during his early years in office.
..... The bankruptcy filing comes as the owner of The Art Factory, David Garsia, said his four party halls are supposed to host about 160 weddings and other "upcoming" events in the near future. The complex also features exhibits and rents studios to artists and filmmakers.
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Court papers indicate Garsia plans to continue operations during the bankruptcy.
..... He said in court papers that the bankruptcy was trigged by a New Jersey superior court judgment issued last month [08/2024] against his business involving a $12.5 million loan in 2018, which was supposed to provide him with money to do a massive renovation of the complex.
..... Under the judgment, Garsia is supposed to provide rent and fees from his Art Factory events to the lender, 100 Mile REIT Incorporated, a group headed by Bergen County real estate investor Billy Procida. Garcia said in court papers that such a frequentest would destroy his business.
..... But Procida's lawyers said in their court-filed objection to the bankruptcy that Garsia has no right to the revenue generated by The Art Factory in light of his alleged track record of defaults on the loan and the fact that he woes Paterson almost $250,000 in unpaid property taxes and sewer charges.
..... In a statement issued Monday, [09/02/2024] Garsia said the bankruptcy was designed to "replace a problematic lender."
..... "The Art Factory continues to reserve venues for weddings and events through 2026 and we look forward to providing an exceptional experience for every family's celebration!" Garsia said in a statement sent via text message.
..... Neither Procida nor Sayegh could be reached for comment.
Controversies
..... During the past decade, The Art Factory has been embroiled in numerous controversies.
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About eight years ago, Paterson fire officials intervened and canceled a massive Christmas party planed at the complex because The Art Factory lacked fire safety protections, including requisite sprinklers.
..... shortly after that, Patterns community improvements director David Gilmore issued more than 150 violations against tenants at The Art Factory for not having certificates of occupancy. those summoner ended up being dismissed, and Gilmore filed a political retaliation lawsuit against the Sayegh administration saying the mayor was protecting Garsia, his political ally and supporter.
..... Sayegh's inaugural ball took place even though The Art Factory at that time had not yet obtained required licenses for music and dancing, something Garsia did later.
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One of Sayegh's first press conference as mayor touted a trolley serve that he said The Art Factory would profile for downtown Paterson, a promise that never was fulfilled.
..... When asked about the bankruptcy, Gilmore said Sayegh had given Garsia "carte Blanche."
..... "If his friends in City Hall had anything to do with it, he'd be getting everything he wanted," Gilmore said of Garsia.
..... The bankruptcy has trigged speculation in city real estate circles about what will become of The Art Factory property on Spruce Street once the financial battle between Procide and Garsia is resolved.
..... Garsia's complex sits nest to the New Jersey Community Development Corporation or NJCDC, Paterson's largest nonprofit developer.
..... "I wasn't aware of the bankruptcy filing, but if it were to happen I think the entire complex would need to be re-imagined and I could easily see it becoming a mixed-use site with housing and office space," said Bob Guarasci, the NJCDC's executive director.
..... "But given the size and complexities of the site, my guess is that nay redevelopments would need to be done i phases over a number of years."