McDonald’s Dispute Pushes Bankruptcy Judge Over the Edge

It takes a lot to exasperate Judge Kevin Gross of the Delaware bankruptcy court. But after nearly six years on the bench, he finally hit his limit over an unfinished McDonald’s on a Manhattan street corner.

Last week, Gross did the judicial equivalent of throwing up his hands and walking away over a lawsuit between McDonald’s Corp. and the developer of the controversial One Madison Park condominium project—a 50-story tower whose legal troubles have made it an icon of the collapse of the commercial real-estate market.

McDonald’s, which owned the two-story restaurant that was torn down for the condo building, pressed the developer over its broken promise to allow the restaurant to reopen either in or near the swanky new project on 22 East 23rd St. in New York.

But that’s boiling it down. The actual arguments before Gross took up hundreds of pages and prompted him to formally abstain from the issue, meaning that he won’t allow the issue to move forward in his court.

The dispute has very little to do with Gross’s bankruptcy-court expertise, he wrote. And resolving the matter would force him to interpret New York state law that, frankly, he doesn’t have time to learn.

“It is fair to say the parties won’t agree on what day it is,” Gross said in an opinion filed with the U.S. Bankruptcy Court in Wilmington. “The proceedings would therefore occupy far more of the court’s and staff’s time than the size and number of proceedings might suggest, and the court’s efforts would certainly be greatly disproportionate to the minimal, if any, significance” to the condominium tower’s reorganization efforts.

Gross pointed out that dodging complex issues isn’t his style. Since picking up a gavel, he has overseen the contentious Chapter 11 case of the Los Angeles Dodgers, and he supervised the unwinding Canadian telecom giant Nortel Networks Corp., among other complicated cases.

“It is worth noting that this judge has never—never—abstained from hearing a matter regardless of its complexity and difficulty,” he wrote in his eight-page opinion. “The court fully recognizes that abstention is a rare and extraordinary act. The circumstances presented here are unique and exceptional.”

McDonald’s attorney Paul S. Rubin of the Herrick Feinstein law firm said Gross’s decision means that both groups could eventually take their arguments to New York state court, where the fighting could continue.