A downtown IHOP sits on a parcel of land worth nearly $27 million and a battle over the future of the site, surrounded on three sides by skyscrapers and likely to someday hold one of its own, has raged since 2020.
A hearing Wednesday in a bankruptcy case that’s been shielding the parcel owned by Nate Paul from foreclosure could move it closer to redevelopment.
Cesar Rainey Street LLC, a creditor, has attempted to foreclose a handful of times since Paul’s embattled ownership group World Class Holdings began failing to make payments on a loan for the site at 707 E. Cesar Chavez St.
Each time, a forced sale has been held off through filings in state and federal courts by Paul, the one-time superstar Austin developer who played a central role in the impeachment of Attorney General Ken Paxton.
Most recently, the parcel was set to be auctioned off Dec. 2. Paul was able to stave off that sale by filing in state District Court for an injunction, then appealing to the state’s 3rd Court of Appeals in Austin.
That day, the corporation that owns the property — Paul’s WC 707 Cesar Chavez LLC — entered bankruptcy to stop the sale.
Cesar Rainey Street wants the case thrown out, arguing in court documents its sole purpose is a “bad faith” effort to use the court to block its legal rights as a creditor. Paul denies that, saying in court documents the bankruptcy was simply an effort to obtain a final payoff amount so it could seek new financing.
The dispute has roots going back to 2017, when Paul’s World Class Holdings obtained a $2.7 million loan from Amplify Credit Union. By May 2020, World Class Holdings began to falter on its payments. Amplify notified Paul’s company of its lapsed payments but did not receive additional funds. Cesar Rainey Street purchased the debt not long after that and says in court filings that it has ballooned to more than $5.1 million today.
“From the outset, the dispute centered on the Debtor’s effort to pay the loan in full and Cesar Rainey’s failure and refusal to provide payoff information,” Paul said in a Jan. 13 filing.
His World Class Holdings does not seek to avoid payment, it said, and its litigation in recent years has been not a delaying tactic but an effort to refinance, pay off its debt and secure the property. Owners associated with Cesar Rainey Street LLC have a pattern of not providing payoff data in other attempts to foreclose on World Class Holdings properties, Paul says.
According to court documents, now that World Class Holdings has the amount owed, WC 707 Cesar Chavez can refinance and pay off the loan. It did not set a timeline for doing that.
The court is set to address those claims Wednesday. A victory for Cesar Rainey Street could mean a prompt liquidation sale of the property.
Lawyers have asked him to be put behind bars until he provides all his financial data or pays off the $11.5 million a federal court in California says he owes.