Courts roundup: $15.5M pre-foreclosure, $15M in two bankruptcies
CMBS trustee files a $15.5 million pre-foreclosure action against the owners of 6 Stone Street in Manhattan and 153 and 162 Montague Street in Brooklyn. The complaint identifies the owners as affiliates of Conway Capital. LINK
Sources familiar with the loan said the filing was a procedural action and the parties have an agreement on a forbearance that will bring the loan into good standing and resolve the issues between the borrower and Rialto Capital Advisors, who have a longstanding relationship. In addition, the owners are selling the property.
Court filings represent the position of one party and are not necessarily accurate or complete.
“Based on the Default that exists under the Loan Documents, as of May 6, 2023, the principal amount of $17,630,717.23, plus unpaid interest at the contract and default rate, plus attorneys’ fees and costs, and all other costs and other amounts due and owing pursuant to the Loan Documents, which shall continue to accrue until paid in full. Interest accrues at the rate of 4.35% per annum and default interest accrues at the additional rate of 5.000% per annum, for a cumulative rate of 9.35% per annum.”
According to the complaint, “Borrowers failed to make payment of principal and interest due May 6, 2022. Subsequent payments have been made by Borrowers, but those payments have failed to cure the default and the Loan is currently due for the December 6, 2022 payment. 36. Pursuant to the Loan Agreement, the failure to make said payment constitutes an “Existing Event of Default” (as defined therein). 37. Borrowers are in default of its obligations to Plaintiff under the Loan Documents based on Borrowers’ failure to, inter alia, make said payments to Plaintiff; failure to provide confirmation that the leasing expenses for the replacement tenant were paid in full; failure to comply with the cash management requirements as set forth in the Loan Agreement; and failure to replenish the account per section 3.11(b) of the Loan Agreement (the “Default”). 38. By letter dated October 17, 2022 (the “Recourse Demand”), Special Servicer, in its capacity as special servicer for Plaintiff, notified Borrowers and Guarantors of the Default and demanded payment of 10% of the Debt under Foreclosure Moratorium Recourse Period, pursuant to the terms of the Loan Agreement. Such payment was due no later than November 2, 2022 and has not been received.”
The real estate investor Ira Epstein filed two bankruptcy petitions in the U.S. Bankruptcy Court in Brooklyn yesterday as two properties in Brooklyn are facing pre-foreclosure filings made by lender Valley National Bank. 1-23-42768-jmm 1-23-42775-nhl
The borrower owns two properties and Valley National Bank filed pre-foreclosure actions against both of them January 11, 2023, and the cases are being heard in parallel in state court. There was a $10 million loan given for 4112 4th Avenue which is case 501073/2023 and a $5 million loan given on 8200 Bay Parkway, 501088/2023. On August 3, 2023, Epstein filed a bankruptcy for each case. Link
In March 2023 in State Supreme Court rulings, the judge ordered a receiver for both properties. The latest action is the bank submitted a motion for summary judgment, but it has not been heard yet. The lastest court document from June 28, 2023 is the borrowers attorney asking for a delay in that hearing due to the borrower’s poor health at the time.
UPDATED: Updated with background commentary on the pre-foreclosure case.