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Norwich portion of Norwich Hospital property still in legal limbo

July 24, 2018

Norwich — The ownership of the nearly 50-acre former Norwich Hospital property in Norwich changed hands on June 20 with the completion of a mortgage foreclosure action. But legal tie-ups to future development there might not be over, as the former developer has included the property in his Chapter 7 bankruptcy filing in federal court.

Mark Fields, who headed Thames River Landing LLC, which purchased the property from the state in 2015, filed for Chapter 7 bankruptcy in U.S. District Court in Hartford on June 18, the day before the foreclosure action by Castanho Development LLC was finalized in New London Superior Court.

On June 20, the certificate of foreclosure was filed in the Norwich land records, and the LLC was listed as the new owner of the four properties, two with addresses of 626 and 705 Laurel Hill Road and two with no numerical addresses.

But Fields listed the properties as assets in the Chapter 7 bankruptcy filing, with total real estate value of $1.24 million.

Castanho Development LLC filed a motion June 27 asking the court to remove the properties from the case “for the purpose of enforcing its possessory interest in the property.” The motion stated that Fields “is in possession of the property, although his right to possession has expired.”

Fields has been living in the house he renovated at 626 Laurel Hill Road, which is part of the former Norwich Hospital property.

Fields and Mark Castanho of Castanho Development could not be reached for comment Tuesday.

Bonnie C. Mangan, the Chapter 7 trustee in the case, objected to Castanho’s motion, calling Thames River Landing “the owner of record” in the property, and Fields as a member of Thames River Landing.

“On June 18, 2018, the debtor’s interest in Thames River Landing LLC became property of his bankruptcy estate,” Mangan wrote in her objection, citing a chapter of the bankruptcy code on property.

Mangan also wrote that she received copies of two offers by outside parties to buy the properties for prices that “far exceed the value that was placed on the property in the foreclosure action,” and Mangan wrote that the trustee believed the offers to be valid.

The bankruptcy court has scheduled a hearing for 10 a.m. Aug. 9 on Castanho’s motion and the objection.

Castanho last week met with Norwich Mayor Peter Nystrom and Norwich Community Development Corp. President Robert Mills to discuss possible future development of the property, which abuts the 393-acre former Norwich Hospital in Preston slated to be turned over to Mohegan Gaming & Entertainment for a major development.

Nystrom described the two-hour meeting as “a very nice meeting.” He said Castanho asked city officials what type of development the city would like to see there, Nystrom said. Nystrom explained the current zoning for the property, the goals in the Plan of Conservation and Development, and that housing would not be permitted under current zoning.

Nystrom said the land where a former subdivision of single-family homes for Norwich Hospital staff on the east side of Route 12 might be suitable for “very limited” housing.

“We made it very clear that mixed use would be the best use for the area,” Nystrom said. “Commercial retail is my hope for mixed use.”

c.bessette@theday.com

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