Haruvi brothers battle over refi of $53M loan for 500-plus Manhattan-focused portfolio

Arthur Haruvi sued his brother Abraham Haruvi concerning the refinancing of a $53 million loan secured by a 500-plus residential portfolio concentrated in Manhattan. They have sparred several times in State Supreme Court in recent years over control and management. The case was filed Friday, July 30, 2021, in New York State Supreme Court.

The brothers Arthur and Abraham amassed a 500-plus residential rental portfolio in 31 building they mostly own as 50-50 investors. Arthur alleges he had secured potential lenders including CIM Lending Services and Bethpage Federal Credit Union to refinance a $52.97 million loan from 2011 and obtain operating capital, but Abraham refuses to assent to the loans or an additional loan extension. Arthur alleges Abraham may be attempting to force a foreclosure and dissolution of the companies. The suit seeks $10 million and sought an order from the court compelling Arthur to sign a loan extension agreement.

In a reply letter filed Saturday, July 31, Abraham painted an entirely different picture, that it was he, in fact, who was close to securing financing for the portfolio, and that there is no imminent threat to the business that would merit the court signing the injunction.

According to Abraham’s letter to the court, “While [Arthur] was engaged in further encumbering the properties and generating outsized fees for Capital One, Abraham was in the final stages of negotiating refinancing of the loans at an extremely favorable 2.65% interest rate. He has, out of his own pocket, paid a $160,000 good faith deposit. A commitment letter is expected to be issued imminently.”

The attorney for Abraham, Adam Felsenstein of Tannenbaum Helpern Syracuse & Hirschtritt, said, “We wholeheartedly refute the allegations that Abe is doing anything to damage the business. Everything he is doing is in the best interests of the business, to preserve [it] and put it on a strong financial footing.”

The attorney for Arthur did not immediately respond to a request for comment. The judge, according to a review of the court documents filed, did not sign the requested injunction compelling Arthur to sign a loan extension.

Some of the properties include 309-315 West 54th Street, 244 West 74th Street, 38 West 75th Street, and 54 West 75th Street, 404-416 West 56th Street,  234 East 32nd Street and others.

According to Arthur’s complaint, “[Abraham’s] actions have no rational basis, are directly and necessarily contrary to the interests of the Companies, and will cause the end of the Companies, all based on his anger, animosity and vindictive behavior towards his brother Arthur… The Lender further advised that absent Abraham’s signature and express agreement to the Extension on or before July 31, 2021, the Loans would be thirty-days past the Third Forbearance Period and would trigger the accrual of interest on the Mortgage Debt at the Default Rate. Equally alarming, Capital One advised that, should Abraham fail to sign the Extension, Fannie Mae would transfer the loans to its special asset management group ‘for further resolution’… The Companies are barely servicing the current debt at the current interest rate. If the interest rate increases to the Default Rate, the Companies will not be able to pay the interest amount and meet their other financial obligations. This unlawful diversion amounts to many millions of dollars of corporate assets taken for the personal benefit of Abraham… In prior correspondences to Arthur, Abraham has indicated and threatened Arthur that he would force the Companies into foreclosure and dissolution and is now attempting to make good on that threat.”

Direct link to Acris document. link

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