Real Estate: Broke in a Big Way

REAL ESTATE

If nothing else, onetime Real Estate Tycoon William Zeckendorf Sr. managed to go broke in a big way. By the time his Manhattan-based Webb & Knapp, Inc., collapsed in 1965, Zeckendorf had succeeded in enlisting an army of creditors, including some of Wall Street’s leading financiers, to lend him a helping hand. Late last week, as he petitioned for an arrangement with creditors under the Federal Bankruptcy Act, Zeckendorf listed personal liabilities of $79,076,100 against assets of $1,885,620.

At the height of Zeckendorf’s career, Webb & Knapp had assets of nearly $300 million, owned hotels, office buildings, shopping centers and other valuable real estate in the U.S. and Canada. But the company sorely overextended itself, got caught short when construction costs rose far beyond original estimates. As Webb & Knapp’s debts mounted, so did Zeckendorf’s: his petition in New York’s U.S. District Court listed 99 creditors.

The biggest claim against him is a $50 million damage suit brought by Webb & Knapp’s court-appointed trustee, former Commissioner of Internal Revenue Mortimer M. Caplin. It charges Zeckendorf and twelve colleagues with “waste and mismanagement” of the company’s assets. Other liabilities include loans to Webb & Knapp personally guaranteed by Zeckendorf. Among those making the loans were the Bank of Nova Scotia and Manhattan’s Franklin National Bank.

Zeckendorf, 63, is now working for a real estate firm headed by his son William Jr. According to his petition, he draws a salary of $37,500 a year, of which 10% has been going to satisfy a judgment against him by one of his creditors, New York’s Manufacturers Hanover Trust Co.