Developer who failed in Norristown files for bankruptcy

The man who flailed and failed at turning an old Norristown shopping center into a movie studio has filed for bankruptcy, a move that places on hold Montgomery County's lawsuits it filed to recoup some of the $24.5 million it lost in the development deal.

The county's efforts to recover money from developer Charles Gallub will shift to U.S. Bankruptcy Court in the District of New Jersey. That is where Gallub, whose business is based in Bellmawr, N.J., filed for Chapter 11.

His attorney could not be reached for comment.

County Commissioner Josh Shapiro said Gallub's move wasn't surprising.

"We expected that he might take this route, and now we have to allow this bankruptcy process to play out in court," Shapiro said. "We owed it to the taxpayers to do everything in our power to recover from him. We have and will continue to do that through this legal process."

In the bankruptcy petition, Gallub lists creditors holding the 20 largest unsecured claims against him, which total $79 million.

The tally includes a $17.27 million claim by Montgomery County's Redevelopment Authority and a claim of an additional $8.2 million by the county itself - both of which represent movie studio investments.

The developer filed for bankruptcy July 7, according to the document, called a voluntary petition.

The filing was a long way from the fanfare around 2008 that surrounded the launch of Gallub's plan to turn the old Logan Square Shopping Center at Johnson Highway and Markley Street into a movie studio designed to bring the dazzle and dollars of Hollywood to beleaguered Norristown.

The plan fizzled as the economy slowed and funding for wooing the film industry to Pennsylvania shrank.

In 2012, Gallub no longer could pay the project's debts. In 2013, the company he created for the project was foreclosed on by its main private investor, Logan Lender, which later that year acquired the shopping center property at a sheriff's auction.

The county was left on the hook for its $24.5 million investment, which came from a variety of public funds.

Montgomery County filed three complaints against Gallub in civil court at the end of May, "one in the name of the Redevelopment Authority on behalf of the county, and one in the name of the Redevelopment Authority on behalf of Norristown," said Joshua Stein of the county Solicitor's Office.

Those are the complaints that are stalled.

The county also filed a fraudulent transfer complaint that seeks "to unwind Gallub's transfer of his 50 percent interest in a home to his girlfriend," Stein said. The home has an estimated value of $1 million, he said. The fate of that complaint is unclear.

A lawyer the county hired to handle the lawsuit against Gallub was unsure what would come next.

"We're trying to understand what's happening in the bankruptcy," said Matthew A. Hamermesh. "We're trying to determine what's available at this point."

Source: Phily.com