$15.7M Williamsburg bankruptcy at stalled 16-unit conversion

A developer who planned to convert a two-story commercial building at 80-82 Ainslie Street in Williamsburg, Brooklyn, to a five-story mixed-use property with 16 residential units, filed for bankruptcy protection in Manhattan yesterday, claiming the property was worth $15.7 million but had liabilities of $18.2 million. The project has been plagued with construction problems that pre-date Covid, according to court filings.

Petition LINK

Bankruptcy 23-22587-shl

Juda Klein is the petitioner through the entity Williamsburg Boutique LLC. The filing states the property is worth $15.7 million according to an undated “FMV,” an acronym for fair market value, and has a total of $18.2 million in liabilities.
Juda Klein owns 45%, and he lists Mendel Klein with 10% and Simon Tyrnauer with 45% as co-debtors.

In June 2015, Juda Klein submitted plans to convert the building, and the Department of Buildings permitted the plans in December 2015. The work has not been completed and the city has placed a partial stop work order on the site, according to a review of DOB records.

The property is subject to more than $2.1 million in unsecured debt including alleged mechanic’s liens and, a $2 million lien by Congregation Bnai Jacob.

The property is subject to a total of 16 court cases, most of them mechanic’s lien actions including mechanic’s lien foreclosures, and an ongoing loan foreclosure action filed by lender Bankwell Bank on January 25, 2021 in Stamford, Connecticut Superior Court. FST-CV21-6050150-S Bankwell is seeking to foreclose on the $10.7 million loan from 2017, which the bankruptcy filing says is now a $14 million lien.

The case was set for trial on August 9, 2023, but on August 7, the day of this filing, the judge ordered the trial to start on October 31, 2023, but that was ordered apparently before the bankruptcy filing, which is not represented in the court records as of August 7, 2023.

The project was subject to mechanic’s liens in 2019, and the lender send its first default letter in February 2020, before the New York State Covid lockdown in March 2020. “By notice dated February 24, 2020 (the “Default Letter”), counsel for Bankwell
advised Williamsburg and each of the Guarantors of the foregoing Events of Default with the exception of the Mechanic’s Lien Defaults (other than the lien filed by Best Mechanical).”

Direct link to Acris document. link