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Bankruptcy filing halts auction of Rockville properties

ROCKVILLE — A Rockville company filed for Chapter 11 bankruptcy Wednesday minutes before three of its properties were scheduled to be auctioned to help satisfy an $8 million judgment it owes a former landlord, halting any potential sale.

Ronald Cohen Management Co. lists assets between $0 and $50,000 and liabilities between $1 million and $10 million, according to the filing in U.S. Bankruptcy Court for the District of Maryland. The filing also lists as “disputed” a $6.7 million claim from creditor Tower Oaks Boulevard LLC, the landlord who has alleged Ronald Cohen Management Co. and Ronald Cohen Investments twice forced Tower Oaks into foreclosure by failing to pay rent.

Christopher C. Fogleman, a lawyer for Tower Oaks, was waiting for the auction to begin outside Montgomery County Circuit Court when the bankruptcy was filed. Fogleman noted Ronald Cohen Management was within its rights to file for bankruptcy at any point before the sale. Fogleman filed a notice of appearance in the case, requesting he receive any paperwork filed in connection with the bankruptcy.

“This is not going away,” said Fogleman, of Gleason, Flynn, Emig & Fogleman Chtd. in Rockville.

Tower Oaks had attached the three properties after obtaining its verdict against the defendant Cohen companies. The properties include The Shops at Congressional Village, a Rockville Pike strip shopping center that has been assessed at more than $37 million.

Eric Siegel, principal and legal counsel for Cohen Siegel Investors LLC, has said the defendant Cohen companies have no ownership stake in any of the properties, which are owned by Cohen family members through holding companies. The property owners subsequently filed third-party motions to remove the writs.

But Montgomery County Circuit Judge Ronald B. Rubin last week denied those motions and “pierced the corporate veil,” describing the holding companies as “shells” and “a conduit to keep control of money” and ruling they belong to the defendant Cohen companies.

Sheriff’s deputies were scheduled to conduct the auction. Fogleman said the sheriff’s office, in the days leading up to the auction, had received more than a dozen calls about the properties. Also scheduled to be sold were an office building and another building that houses a post office, both also near Rockville Pike.

Ronald Cohen Management is represented in the bankruptcy proceeding by Stephen A. Metz, a shareholder in Shulman Rogers Gandal Pordy & Ecker P.A. in Potomac.

In the underlying case, a Montgomery County jury in January awarded Tower Oaks more than $4.5 million in compensatory damages. That was in addition to $600,000 for unpaid rent that Tower Oaks had won in a pretrial summary judgment motion. In November 2011, Tower Oaks had been awarded another $600,000 in unpaid rent.

The jury also found that Tower Oaks was entitled to punitive damages but did not determine the amount.

Four months later, following a bench trial, Rubin awarded Tower Oaks punitive damages of $2.2 million as well as attorneys’ fees.

The case is Tower Oaks Boulevard LLC, et al. v. CWCapital Asset Management LLC, et al., 368256V.