Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, January 14, 1994 TAG: 9401140155
SECTION: VIRGINIA PAGE: B-3 EDITION: METRO
SOURCE: MICHAEL STOWE STAFF WRITER
DATELINE: LENGTH: Medium
The 4th U.S. Circuit Court of Appeals upheld the decision of District Judge Samuel Wilson, ending a 15-month legal battle and leaving more than 250 unsecured creditors out of luck.
"We were disappointed," said Frank Friedman, who represented Sidney's during the appeal.
Sidney's, at its peak a chain of 58 women's apparel shops, filed for protection from creditors in January 1991.
In addition to the unsecured creditors that had claims totaling about $3 million, Dominion Bank, now First Union National Bank of Virginia, had a secured claim for $1.7 million.
As part of its plan to pay creditors, Sidney's wanted to build single-family homes on the 50 acres between U.S. 220 - near Hunting Hills Plaza - and Peakwood Drive in South Roanoke.
The property already is accessible from U.S. 220, but Sidney Weinstein, owner of the clothing chain, wanted an entrance from Peakwood, an exclusive neighborhood.
The road was proposed to split a lot owned by Sidney's that once was restricted by covenant to single-family home development. Weinstein argued that the restriction was a "one-shot deal" and applied only to a previous owner.
Bankruptcy Judge Ross Krumm ruled in the store's favor, but the decision was overturned in a civil suit heard by Wilson.
Richard McGimsey, who once owned the lot and now lives on Peakwood, led the group of neighbors opposed to the Peakwood Drive access.
The appeals court affirmed the lower court's decision in December. The next step would be the U.S Supreme Court, but no appeal is expected.
In court, lawyers for Sidney's argued that the land covenant says the deed specifically forbids construction only of apartments, and not a road.
"In Virginia, if you want to prohibit building a road, then there is specific language that says don't build a road," Friedman said. "Here, the restriction wasn't very clear; it was vague."
The site still can be developed using the U.S. 220 entrance, but its value is decreased significantly, said Andy Goldstein, an attorney representing the creditors' committee.
"It's not nearly as attractive as it would have been," he said.
Goldstein said he thinks the land - after being divided into 30 lots - would have been worth $3 million. That would have been enough to pay off First Union, as well as some unsecured creditors. Central Fidelity Bank is owed about $700,000.
Now, it probably won't even be worth enough to pay off First Union, which will gain control of the property, Goldstein said.
As part of the reorganization plan, the unsecured creditors agreed to accept preferred stock in Sidney's. The clothing chain's financial problems continued, however, and the last four stores closed in November.
"They may as well hang those shares on the wall for what they are worth," Goldstein said.
by CNB