In-contract buyer of $120M note at Fortis FiDi tower sues, files bankruptcy to retain deal

UPDATED 10:43 a.m., October 26, 2023: Shelly Listokin of the Midtown-based Urban Realty Partners through the entity URP Maiden Lane LLC claims to have a contract to buy the $120 million senior construction loan from Valley National Bank and Harel Insurance secured by Fortis Property Group’s 161 Maiden Lane project in the Financial District, but is not ready to close, according to a lawsuit filed yesterday in Manhattan State Supreme Court. LINK

On October 25, Listokin’s entity URP Maiden Lane LLC filed for bankruptcy to protect the contract, which would expire on October 26 and URP would lose an alleged $6 million in deposits. The bankruptcy claims it is in contract to pay $96 million for the defaulted loans. Bankruptcy LINK

The suit alleges Urban Realty Partners was being forced to close on the purchase, but for reasons that were not disclosed, it did not want to or was not able to close. The Urban Realty Partners entity filed the suit seeking a restraining order delaying the closing and also seeking to keep some of the documents under seal to protect business interests.

Court filings represent the position of one party and are not necessarily accurate or complete.

Fortis Property Group submitted a new building construction project for a 98-unit, 138,196 square-foot residential (R-2) building at 161 Maiden Lane. The plan was filed on May 9, 2014 and was permitted on February 12, 2016. It calls for the construction of a 646-foot tall, 57-story building and was filed with the New York City Department of Buildings under job number 121185680. The project is currently known as Seaport Residences.

Fortis also submitted a plan for the property in 2015 that calls for an 80-unit condominium building with a $273 million sellout, number CD150152.

This $120 million construction loan has been heavily litigated in part because of alleged construction defects that caused the tower to lean slightly. The other cases include 657252/2020 and 653584/2020.

According to the new filing, “As set forth more fully in the accompanying Memorandum of Law and Affidavit of Shelly Listokin, Plaintiff is at risk of suffering irreparable harm if it is forced to close following Defendants’ bad faith conduct and contractual breaches…

“Pursuant to Section 8.15 of the Loan Purchase and Sale Agreement (the “LPSA”) between the parties, dated as of July 11, 2023, URP is required to seek a protective order to preserve the confidential information that, if released, could threaten both parties’ business’s competitive advantage. Moreover, public release of the LPSA’s economic terms would reveal critical information to adversaries in the Underlying Litigations (as defined in the Listokin Affidavit) would negatively impact the parties’ ability to litigate those actions and/or reach quick and efficient settlements thereof.”

The state court filing says this is an, “urgent application for a temporary restraining order… enjoining and compelling the Defendants… from forcing a closing under the Loan Purchase and Sale Agreement.”

In the bankruptcy filing, the debtor with David Goldwasser as petitioner signatory, alleges it has a contract to buy five loans with an original principal of $125 million, for $96 million, and has put down $6 million. The closing date was October 26, and URP filed the bankruptcy to give it a 60-day period to close.

The petition states “The Debtor is a newly formed limited liability company which entered into a contract to purchase a total of five mortgages held by Valley National Bank secured by an unfinished residential development located at 161 Maiden Lane, New York, NY (the “Loan Purchase Agreement”). 7. The Loan Purchase Agreement has been amended and pursuant to the most recent amendment, the Debtor (which has deposited a total of $6 million) is required to close no later than October 26, 2023. Failure to close by October 26, 2023, may result in the forfeiture of the $6 million deposit…The Debtor believes the sellers, under the Loan Purchase Agreement, have breached certain provisions relating to disclosure of certain information in connection with a mediation in the foreclosure action. 9. The Debtor intends to utilize the Chapter 11 process to obtain the sixty (60) day extension afforded under section 108(b) of the Bankruptcy Code to close the Loan Purchase Agreement.” According to the state TRO complaint, “For example, to the extent Defendants implied that Urban Realty Partners was the “Buyer,” Defendants led third parties to believe (incorrectly) that the party likely to be stepping into the litigation has substantial resources that could be used for settlement (and/or that would be available to satisfy a judgment in the event a settlement of the Underlying Litigations cannot be reached). 47. Such a misstatement would place Plaintiff at a significant disadvantage by encouraging other parties to take more aggressive settlement positions, making it substantially more difficult for Plaintiff to reach settlements with its junior creditors…Despite Defendants’ gamesmanship, Plaintiff still desires to move forward with its purchase and has every intention of closing the deal with Defendants pursuant to the LPSA and its Amendment, provided it has ample opportunity to assess what was said and what the impact those statements may have on the financial viability of the contemplated transaction (and, in particular, on its ability to negotiate potential deals with Fortis, the borrower, and other junior creditors).

The story was updated on October 26, 2023, with bankruptcy information.

Direct link to the property’s ACRIS page and link to DOB NOW portal.