Standard High Line lender wins interim motion as $170M foreclosure case proceeds

Wells Fargo, the trustee for bondholders of a $170 million loan given to Gaw Capital Partners for the $340 million purchase of the Standard High Line Hotel in 2017, won an interim decision in federal court yesterday as it pursues its foreclosure of the loan, which it declared in default in June 2020 as the pandemic restrictions forced hotels to close their doors.
Wells Fargo filed the pre-foreclosure action on behalf of CSAIL 2017-CX10 in U.S. District Court in Manhattan on November 1, 2021. LINK

Goodwin Gaw, who leads Gaw Capital, is a real estate investor based in Hong Kong who’s family Forbes estimates has $1.67 billion in assets. Gaw Capital, according to Forbes, manages $27 billion in assets.

The Real Deal reported at the time of the foreclosure filing that Gaw Capital claimed Apollo Global Management, which it said holds a stake in the debt, was refusing to engage in “good faith negotiations.”

According to the interim decision by the U.S. District Judge, ruling in favor of Wells Fargo against Gaw’s two counterclaims., “GC SHL asserts two counterclaims: for breach of the implied covenant of good faith and fair dealing and for a declaratory judgment that Wells Fargo violated the terms of the Loan Agreement. GC SHL premises its counterclaims on two theories. The first theory posits that GC SHL was unable to make its loan payments because Wells Fargo delayed disbursing funds from the façade subaccount, thus manufacturing a default. The second theory posits that GC SHL suffered further injury due to Wells Fargo’s delays during the course of the parties’ post-default negotiations. Wells Fargo contends that both counterclaims are barred as a matter of law by the parties’ pre-negotiation agreements and that the first counterclaim for breach of the implied covenant of good faith and fair dealing is independently barred as a matter of law under the Loan Agreement’s prohibition on counterclaims for money damages. GC SHL counters that a claim for good faith and fair dealing cannot be waived as a matter of public policy.”

Direct link to Acris document. link