Chetrit Group accuses Maverick of fixing UCC auction, seeks $20M

The Chetrit Group alleges that Maverick Real Estate Partners conducted a UCC auction for control of the hotel development project at 255 West 34th Street in the Garment District, Manhattan, on January 18, 2023 in a “commercially unreasonable” way, thereby preventing outside buyers from participating. Because of that, the complaint says, the Chetrit Group lost out on $20 million that it would have been paid based on its belief that the mezzanine position was worth $40 million within an estimated $140 million total valuation. Instead, Maverick took control at a valuation of about $100 million.
Court filings reflect the position of one party and are not necessarily accurate or complete. Maverick has not yet responded in court papers.

The Real Deal reported on the filing yesterday.

According to the complaint, “Indeed, the Terms of Sale, as set forth in paragraph 62 above, were intentionally designed to discourage independent bidders and to ensure that there were no independent bidders at the auction—thus ensuring that Junior Mezz Lender could buy the Interest on the cheap. Further, while the Terms of Sale, as set forth above, were not commercially reasonable on their face, that no person other than Junior Mezz Lender showed up to bid at the auction—especially after approximately 62 people accessed the data room—and that the Interest was sold for less than 0.25% of its fair-market value separately and independently confirms that the sale of the Interest at the January 18 auction was not done in a commercially reasonable manner. 87. Had Junior Mezz Lender conducted the sale of the Interest in a commercially reasonable manner, the Interest would have sold for over $40 million, which would have resulted in the Junior Mezz Loan being paid off in full and over $20 million in surplus proceeds being due to Junior Mezz Borrower. Thus, Junior Mezz Lender is liable to Junior Mezz Borrower for an amount to be determined at trial, but which is not less than $20 million, which is equal to the loss of Junior Mezz Borrower’s equity in the Interest… Between July 2019 and October 2022, Mortgage Borrower spent over $146 million on construction of the hotel (over $112 million of it equity)—building 23 stories up and completing the cantilevered floors from floor 11 to 23. ” https://therealdeal.com/new-york/2023/04/05/maverick-stole-20m-from-me-joe-chetrit/
Court LINK

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