The developer behind Foster + Partners' 3 Sutton Place tower on Manhattan's East Side, originally planned to be 290-metres tall, lost a fight to block foreclosure proceedings on the site before declaring itself bankrupt this week.
Developer Bauhouse Group defaulted on a $127 million (£89 million) loan from Gamma Real Estate and the site was set to be sold, effectively cancelling the project.
But the developer declared itself bankrupt on Monday, the day the auction was due to take place, leaving the future of the project unclear.
The Foster + Partners tower was initially designed to be 80-storeys and was recently cut to 68-storeys as the developer scrambled to save the project, said the Real Deal, a New York real estate newspaper.
Gamma began foreclosure proceedings against Bauhouse to potentially regain control of the property. Bauhouse had sought to stop the proceedings with a restraining order issued by the State Supreme Court.
But on 23 February a judge lifted the restraining order, allowing Gamma's foreclosure process to advance.
If Bauhouse is forced to give up the site it will be put up for auction, at which time Gamma or another buyer could purchase the property. The decision to declare itself as bankrupt is seen by some as a delaying tactic from Bauhaus.
The site, which includes substantial air rights, could sell for as much as $1 billion (£703 million), according to the Real Deal.
Designed by British architect Norman Foster's firm, the tower was to contain 113 apartments, together covering over 29,000-square-metres.
The design featured an exposed exterior grid, and the building would have loomed over its neighbours.
"It's a real opportunity to do something special," Bauhouse founder Joseph Beninati told the New York Times last year, "but if a joint venture partner doesn't show up, I'll have no choice but to sell."
Sutton Place is a largely low rise residential street near the East River and is considered one of Manhattan's more prestigious addresses.
The project had attracted opposition from local residents, who were in the process of requesting a change in zoning policy to introduce height restrictions for the neighbourhood, according to Bloomberg. If successful, this action would also have blocked development of the tower.
Foster + Partners is current working on a 42-storey tower on the East River at UN Plaza and a skinny residential tower on 53rd Street in Midtown East.
Last year it was ousted from its tower project for the World Trade Centre site in favour of Bjarke Ingel's firm BIG.
New York is awash in ultra luxury real condo projects, many of which are being designed by internationally renowned architects including Alvaro Siza, David Chipperfield, Herzog & de Meuron, and Zaha Hadid.
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