Courts roundup: Related affiliate sues Meadow, Be-Aviv sues Heritage re Bronx parcel, more

Related Companies affiliates sue Meadow over $15M mezz loan: Three companies affiliated with Related Companies, which provided $15 million in mezzanine debt on the Gregory Hotel, are suing Meadow Partners to recover guarantees related to those loans. Meadow Partners bought the Gregory Hotel at 42 West 35th Street in 2014 for $49.34 million, and lost the property earlier this year in a foreclosure action.

The court filings are the positions of one party and are not necessarily accurate or complete. The respondent parties have not yet filed papers in these actions, which were all filed yesterday.

According to the complaint, “Plaintiffs bring this action to enforce an irrevocable and unconditional written guaranty by Defendant Meadow Real Estate Fund III LP (“Defendant”) of the payment of Guaranteed Obligations (as defined below) due with respect to a mezzanine loan in the principal amount of $15,000,000 (the “Loan”) extended to +42 W 35th Mezzanine LLC (“Borrower”), pursuant to that certain Mezzanine Loan Agreement, dated as of December 11, 2017, by and between Borrower and Plaintiffs (the “Loan Agreement”).The Loan was for an initial three-year term (the “Initial Term”), with a maturity date of December 10, 2020 (the “Maturity Date”).” The funds are part of Related Companies Related High Yield Credit Strategy for “Subordinate debt origination and acquisition secured by transitional real estate.”   “An Event of Default occurred under Section 10.1(a) of the Loan Agreement due to Borrower’s failure to make the required Monthly Debt Service Payment in July 2019. 34. On August 13, 2019, Plaintiffs provided notice that an Event of Default had occurred and reserved their right to require payment of interest at the Default Rate from and after the occurrence of the Event of Default in July 2019.” LINK

Be-Aviv sues Heritage despite $11.9M loan payoff: This action relates to an ongoing dispute over control of 286 Rider Avenue in the Bronx, even after Heritage Equity Partners made a payoff of $11.9 million in January. “On January 11, 2022, Development filed the Notice of Payoff and Confirmation of Wire (“Wire Notice”) in the Bankruptcy Case.” The complaint continues that there are ECB violations and Be-Aviv is seeking to maintain the value of the property. Previous coverage here on a bankruptcy case, that remains active. LINK

Residents sue over retail at 62 Orchard Street: The residential owners of the building 62 Orchard Street in the Lower East Side are suing the entities and individuals exercising control over the retail and second floor space of the building. According to the complaint, “On or about November 5, 1998, Loft Corp. and Isaac Gluck entered into the original Partnership agreement, the Co-Ownership Agreement. Under the Co-Ownership Agreement, a partnership entity was formed between Loft Corp. and Isaac for the purpose of owning, operating and managing the real property and Building located at 62 Orchard Street, New York, New York…. since Isaac’s death [in 2015] the Trust has failed to pay its full share of the Building’s monthly maintenance expenses and other Building assessments, making only partial (and substantially deficient) payments and doing so in a routinely untimely manner. Even worse, in recent years the Trust has made only a fraction of its required payments… Accordingly, Plaintiffs seek an award of damages for the Trust’s chronic nonpayment of Building expenses, including interest and other penalties provided for in the Partnership Agreement, damages and injunctive relief (as against both the Trust and Studio Exhibit) for the unreasonable and dangerous nuisances created and permitted in the Building, damages and injunctive relief for the Trust’s other breaches of the Partnership Agreement, and damages for the Trust’s breach of its fiduciary duties.” Plaintiffs filed their claims against the Managers/Occupants because certain Managers/Occupants had, since Isaac’s death in 2015, held themselves out as the “owners” of the cellar, first and second floors of the Building and, moreover, actively concealed that, since 2009, ownership of Isaac’s rights, interest and obligations under the Partnership Agreement were purportedly assigned to and held by the Trust.” LINK