Involuntary bankruptcy in Flatbush where Hello Living faces $15M foreclosure

Seven investors filed an involuntary bankruptcy at a 43-unit, one-time condominium project at 2417 Albemarle Road in Flatbush, Brooklyn, developed by Eli Karp’s Hello Living, that is threatened with a $15 million foreclosure action. The filing is an attempt to retain a portion of the $2.44 million in equity they invested nearly 10 years ago.
Karp is facing foreclosure in other properties.
Hello Living submitted a new building construction project for a 43-unit, 34,732 square-foot residential (R-2) building at 2417 Albemarle Road. The plan was filed on April 18, 2014 and was permitted on July 1, 2015. It calls for the construction of a 123-foot tall, 12-story building and was filed with the New York City Department of Buildings under job number 320915505. The project is described in the filing as: proposed new 12 story and cellar residential building with 43 dwelling units. The project was originally intended to be a condominium, but Karp never filed plans with the New York State Attorney General, according to a PincusCo review of filings records.
Karp obtained construction financing in 2016, then refinanced that with a $15 million loan from Arbor Realty Trust in 2019. That loan fell into default, according to court records, and Lily Guo’s iCross Capital bought the debt in April 2021, and commenced the foreclosure case in in June 2021. 513790/2021. In November 2022 the judge appointed a receiver.
In a series of three complaints, Eli Karp accused iCross Capital, Arbor Realty Trust and Madison Realty Capital of aggressive tactics in an effort to take over Karp’s developments. All those complaints have been dismissed though at least one was appealed.
The plaintiffs in this bankruptcy case claim they bought shares in the development that were convertible to ownership of a condo unit, in an arrangement similar to that of HFZ Capital Group which sold convertible investments.

According to the petition, “Petitioners were originally part of a class of private investors, who previously invested substantial sums in the Project pursuant to separate subscription agreements under which each retained the right to either (i) withdraw all capital immediately upon demand or (ii) convert their Class B membership interests into a contract to buy a designated apartment at the Property upon the approval of a condominium offering plan by the New York State Attorney General.” “The ultimate goal of the bankruptcy proceeding is to establish an orderly auction sale process for the Property”

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