Churchill places Crown Heights project with $18M loan in bankruptcy

By Adam Pincus

Churchill Real Estate, which is co-owner of the stalled residential and commercial development at 945 Bergen Street in Crown Heights, placed the owner entity into bankruptcy last week, citing management failures and $18 million in secured debts. The plan envisions a bankruptcy sale of the asset.

The chapter 11 filing made by Nassau Brewing Company Landlord LLC in the Eastern District of New York on Friday said alleged mismanagement precipitated the need to file for restructuring and seek the sale. The property is co-owned by Crown Hill Development.

The successor manager of the project is Sean Rucker, a vice president at Churchill, a Soho-based development firm founded by Justin Ehrlich and Sorabh Maheshwari. Churchill holds a preferred membership interest in the project. The attorney on the filing was Kevin Nash of Goldberg Weprin Finkel Goldstein.

The project has been delayed due to the alleged mismanagement the filing asserts. There is one active civil case involving Nassau Brewing Company. In it, a retail tenant alleges it was never able to take possession of its space, yet the landlord has not returned the deposit and first months rent, totaling $189,000. The bankruptcy says those funds were “diverted.”

According to the project history provided in the bankruptcy filing, Rucker was appointed successor manager on July 12, 2021, to replace the former manager Fabian Friedland of Crow Hill Development. The filing says the change was made “for cause due to various payment and performance defaults involving, inter alia, misappropriation of funds and other wrongdoings.” Friedland did not immediately respond to a request for comment.

Brownstoner provides a history of the development here.

The allegations of poor management involve a commercial tenant’s security deposit, construction funds and allegedly counterfeit corporate documents.

The case was filed to “use the powers of this court to reconcile debtor’s true financing condition and seek a sale of its development property in bankruptcy.”

Friedland acquired the parcel as part of a two-property purchase in 2008 for $7.5 million. He sold one of the parcels, 1036 Dean Street, to All Year Management in 2014 for $17.5 million, but retained this parcel with plans to redevelop it with residential and commercial space.

The debtor entity was created in 2015 and took title in December 2015, though still controlled by Friedland. Churchill acquired an interest as a preferred member in 2016, and provided equity and debt of more than $5 million, the filing says.

“The project has become woefully undercapitalized and presents a myriad of health and welfare issues to the community,” the filing says. The books and records “remain largely in the possession and control of Friedland,” the filing says. 945 Bergen St, Brooklyn, NY 11216