$20M bankruptcy filed at highly litigated 24-unit condo development in Williamsburg

Following several losses in state court and a UCC auction today, Aron Lebovits, an owner of a highly litigated development site at 425 Marcy Avenue in Williamsburg, Brooklyn, filed a petition in Brooklyn to place the owner entity of the property in bankruptcy protection. Ezra Unger filed plans for a condominium building with 24 residential units and one commercial unit.
The Chapter 11 filing alleges the property is worth $19,600,000 and the debts are more than $31 million from lender DW Partners, which is holding the UCC auction. The auction was originally scheduled for January 6, 2023, but was rescheduled for today, according to the filing.
Lebovits alleges the development partner on the project, Ezra Unger, was not authorized to take out loans, a claim Unger has disputed in court filings.

On the tax lot, the most recent condominium plan was filed by 425 Marcy Avenue LLC to create 24 residential units and 1 commercial units in a building at 415 Marcy Avenue in Williamsburg, Brooklyn, called 427 Marcy Avenue Condominiumthat has a $42.8 million sellout, according to an January 4, 2021 submission to the New York State Attorney General. The principal of the sponsor, 425 Marcy Avenue LLC, was Ezra Unger.

DW Partners, in state court, recently alleged that Lebovits is grasping to prevent the foreclosure. “By now seeking the same TRO [temporary retraining order] that has been denied by this Court in the Second action and by the Second Department on appeal, Lebovits wrongly continues forum shopping seeking the imposition of a TRO without posting the Court-Ordered bond, as this Court held necessary to secure DW Marcy’s ongoing damages. This flagrant disregard for the Court’s prior PI Order and MTD Order is wholly inequitable, failing at the threshold to clear the most basic requirement to obtain the extraordinary relief of a TRO.”
According to the bankruptcy filing, “There is a UCC private sale currently scheduled for January 17, 2023 at 10:00 a.m. for the Debtor’s membership interest, and thus the Debtor is being sold.
“I [Aron Lebovits] am the owner of the Debtor in the above-captioned case (the “Debtor”) and I submit this affidavit pursuant to Rule 1007-4 of the Local Rules for the United States Bankruptcy Court for the Eastern District of New York.”
The claims in court filings represent the positions of one party and are not necessarily accurate or complete.
The Chapter 11 filing continues, “It should be noted that Aron Lebovits (“Lebovits”) had transferred 49% of the ownership of the Debtor to Ezra Unger (“Unger”) on a temporary basis, with the agreement that 49% would revert back to Lebovits for a nominal fee of $100 when a certain project was completed. Lebovits is therefore the 51% owner and maintains a right of reversion regarding Unger’s 49%, which unbeknownst to Lebovits was assigned to Unger based on Unger’s fraudulent misrepresentations. Lebovits takes the position that the 49% should revert back immediately given Unger’s fraud and breach of fiduciary duties and breach of contract.
“It is difficult to summarize the circumstances of the last few years in a concise statement. In short, Unger over a number of years, systematically looted Lebovits’ property using a series of fraudulent and forged documents, and operating a sophisticated shell game using a myriad of limited liability companies. Unger preyed on Aron, a baker by trade with little real education, ultimately inducing Aron through lies and manipulation to allow Unger to develop Aron Lebovits’ real property, not owned by the Debtor, where Aron owned and operated his neighborhood bakery for many years, formerly located at 415-425 Marcy Avenue, Brooklyn, New York. Loans were issued by DW Marcy to the Debtor without the knowledge and authorization of Debtor’s owner Aron Lebovits.”
Unger sued DW Partners in 2021, but the case is mostly dormant. 656900/2021. Unger’s original attorney in the case, Morrison Cohen, citing more than $300,000 of allegedly unpaid legal services, is seeking to withdraw as counsel.
Additionally, Lebovits sued Unger and DW Partners, alleging Unger has fraudulently taken control and improperly borrowed the construction loans. 531507/2021.

Two more filings not mentioned in the Chapter 11, including a filing from 2020 that was discontinued, 509661/2020. Another was Lebovits v. Unger, et al. (Kings Cnty. Index No. 536763/2022)

Direct link to the property’s ACRIS page and link to DOB NOW portal.