Courts roundup: Fortress files to foreclose on E. Williamsburg site; Westfield sues Victoria’s Secret for $32M after appellate loss

Courts roundup for May 28 to May 31, 2021: There were no bankruptcies of interest, and one commercial foreclosure above $5 million.

Please note that court filings are the positions of one party and are not necessarily accurate or complete.

Fortress files to foreclose on $5.25M loan after bankruptcy dismissal: As part of a plan filed by a Heritage Equity Partners affiliate to dismiss the bankruptcy of 232 Siegel Street in East Williamsburg by paying off the mezzanine loan, a bankruptcy judge has allowed an affiliate of Fortress to start a foreclosure action in civil court against the 232 Siegel owner entity.
An affiliate of Fortress Investment Group filed on May 28, 2021, to foreclose on a senior loan secured by Heritage Equity Partners’ inactive 155-unit hotel development at 232 Seigel Street in East Williamsburg, Brooklyn. Toby Moskovits placed owner entities in chapter 11 bankruptcy protection in July 2020, to stave off a UCC foreclosure action when a buyer with a hard contract failed to close in May due to Covid. Now, Moskovits was given approval by the bankruptcy court to pay off the mezzanine debt and in exchange Fortress was given permission to file a foreclosure action on the property owner. Moskovits, Michael Lichtenstein and Moshe Dov Schweid are the guarantors on the loan. The property has a secured debt of $5.25 million and with penalty and interest totals $8.2 million owed, according to the complaint. Fortress’s entity DB 232 Seigel LLC bought the debt from Bridgecity Capital LLC in December 2019, according to the complaint. That assignment has not been recorded in public records. LINK

Westfield sues Victoria’s Secret for $32M following Appellate Court loss: Westfield sued retailer Victoria’s Secret for unpaid rent and future rent for a space in the World Trade Center mall. However, the parties are already locked in litigation because more than five years after the lease was signed in March 2015, Victoria’s Secret has not moved into the space. Victoria’s Secret sued Westfield in 2019 to terminate the lease since the space was not ready and at that time Westfield had not even provided as estimated delivery date. The judge in that case in August 2020 denied Westfield’s motion to dismiss the suit, a ruling which Westfield appealed and lost again, meaning the case continues in the lower court. In this new new suit, Westfield is seeking $4.2 million in back rent and $28.1 million in lost future rent. LINK