Developers of Warfield at Historic Sykesville file for Chapter 11 bankruptcy protection

Developers of Warfield at Historic Sykesville, a mixed-use housing and commercial area on Route 32, have filed for Chapter 11 bankruptcy protection.

On March 26, the five entities owning various properties as part of Warfield at Historic Sykesville, filed a petition for Chapter 11 protection in U.S. Bankruptcy Court. Chapter 11 allows a company to reorganize and continue operating its business.

According to court documents, the five entities include Warfield Restorations, LLC, Warfield Properties, LLC, Warfield Historic Quad, LLC, Warfield Historic Properties, LLC, and Warfield Center, LLC.

“Warfield Companies will continue normal operations, which consists mainly of pursuing the development of Warfield’s vacant parcels and, most importantly, the rehabilitation of the project’s vacant buildings,” Steven McCleaf, senior vice president of Warfield Companies, said in a written statement. “Vendors and contractors will continue to be paid for work performed post-petition in connection with the project.”

McCleaf said in an interview Monday that work at the site is continuing.

“Work has not been halted,” he said. “It’s continuing as normal. We currently have over $6 million invested in the project with over $14 million cumulatively invested.”

Warfield Companies purchased the property for $8 million.

McCleaf said the filing of Chapter 11 is in response to the Town of Sykesville’s decision to reclaim the 12 historic structures at Warfield last May. Sykesville Town Manager Joe Cosentini said at the time that the town government wanted to reclaim the properties because Warfield Companies was making “little or no progress” in restoring the buildings, which they agreed to do when they purchased the property in 2018.

“The Chapter 11 filing was a direct response to the Town of Sykesville’s actions to take back ownership of the property after selling it to the developer in 2018,” McCleaf said in his statement. “These actions most recently included an attempt to foreclose on the property, and began in earnest last spring when the town filed lawsuits against Warfield entities in state court to wrest control of the project’s historic buildings from the owner.

“The town left the developer no other option but to file for Chapter 11 to protect its substantial investment in the Warfield project,” he said.

McCleaf said he believes that the company has “lived up to our promises.”

But Sykesville Mayor Stacy Link disagrees.

“When the developer purchased the property in June 2018, $1.1 million of the purchase price was used to establish an escrow fund intended for stabilization of the historic structures,” Link said in an email. “Another $1 million of the purchase price was deferred for two years, until June 2020, when that amount was to be deposited to that escrow.”

Benchmarks were outlined in the agreement. The first benchmark called for restoring the structures by June 2021.

“The developers failed to reach that benchmark in June 2021,” Link said. “It wasn’t until spring 2023 [after the developers were given] two additional years to hit this benchmark for stabilizing the historic structures, that the town took legal action.

“And it wasn’t until last month, four whole years since the developer was late on a payment to the Sykesville taxpayers, that I and the Town Council, as the creditors of that $1 million debt, filed for foreclosure on the undeveloped parcels,” she said.

The town filed a breach of contract civil lawsuit against Warfield Historic Properties LLC in the Circuit Court for Carroll County on May 25, 2023, according to court documents.

A pre-trial conference was scheduled for Nov. 8, with a four-day trial scheduled for Jan. 13-16, 2025, before Carroll County Circuit Judge Richard Titus. However, on March 26 an “automatic stay” was issued in the proceedings due to the bankruptcy filing, court papers state.

The town is demanding that Warfield pay back $1.2 million, including interest and late fees, and intends to begin securing the structures to prevent further deterioration.

“Understand that there are two mutually exclusive things happening here,” Link said. “One, the contract litigation rooted in the town’s pursuing the Reversion Agreement in the sales contract, which is hopeful to end in the deeds to the historic buildings being reverted back to the town. And two, the town demanding the developer pays its past-due note.”

Link is not accepting Warfield’s explanations.

“The developers have been singing from the same sheet of music for five years now,” she said. “But the lyrics are all wrong and frankly, so are the notes. The town is not a big meany. We are not ‘wasting taxpayers’ dollars,’ as the developer’s attorney [Timothy F.] Maloney has accused us.

“We are not to blame for the property owner’s neglect of the sales agreement,” she said. “The opposite is true. Holding an entity accountable is not mean. It’s right and just. If anyone was left with no other option, it was the Mayor and Town Council of Sykesville. We are acting on behalf of the taxpayers who are owed over $1.2 million. If the entities that owe that $1.2 million opt to file for bankruptcy, it appears they have chosen this option over another.”

McCleaf said they have taken steps to make the project financially viable and attractive for both private and public investment. Since 2018, Warfield Companies has made physical improvements to the property, he said.

Last year, the 145 townhouses in the development were completed.

“They have been wildly successful and were even selling in the midst of COVID,” he said.

Three of the historic buildings on the property have also been leased. The commercial tenants include Nexion Health, Zeteo Tech and Alderson Loop. The three properties were restored before the 2018 sale.

“Chapter 11 bankruptcy protection will allow Warfield to defend itself from the town’s continued attacks and reorganize while continuing to operate,” McCleaf said. “We expect to file a timely reorganization plan with the court that will enable us to continue pursuing our vision for the project and pay all creditors in full.”

The Warfield property has a long history , and once was home to Springfield State Hospital, the second mental hospital in Maryland. The site boasted a number of medical and mental health care professionals. It also provided access to care for patients in Central and Western Maryland.

Since the estate had access to springs, it also provided irrigation to farms and orchards, helping the hospital to provide much of its own food while giving patients work therapy.