Photograph: Ed Reeve/Check out Shots/Universal Photos Group by using Getty Photos
The Williamsburg Lodge, on Wythe and North 10th, is just a couple of blocks from the brunch traces at Cafe Mogador and the pedestrian anarchy of the Smorgasburg crowds. When it very first opened in 2017, one of its builders, Toby Moskovits, mentioned she established out to produce a resort “that embodies Williamsburg.” She did. It’s the sort of position with its very own influencer-keep request variety there’s a pool on the roof, open-principle bogs for individuals who are into that form of point, and specialised pet expert services you can incorporate to your continue to be. And so it may perhaps be proper that, for the previous yr, it has been heading as a result of a reasonably flashy individual bankruptcy course of action.
In court docket final 7 days, personal bankruptcy choose Robert Drain stripped Moskovits and her co-operator, Michael Lichtenstein, of their handle of the resort, appointing an independent trustee in their location. It appears to be, as The Genuine Deal documented, Drain considered they could not be reliable in the personal bankruptcy procedure and may be dabbling in fraud. As if to set a finer level on his feelings, Drain went on to say that Lichtenstein in individual “comes across as a really unstable person” who does points that “don’t make a great deal of feeling.”
The shocking point right here is that Drain’s White Plains courtroom has a status for remaining friendly to real-estate debtors. (He oversaw the Sackler family’s Purdue bankruptcy circumstance past calendar year, approving the company’s reorganization prepare and up to $7 million in bonuses for 5 executives.) David Goldwasser, the individual bankruptcy professional whom Moskovits and Lichtenstein tapped, has steered at least 33 property LLCs via Drain, which includes infamous landlord Raphael Toledano’s situation, in which the financial institution eventually obtained Toledano’s East Village properties. Evidently even Drain has his limitations.
The basic principles of the circumstance are this: Moskovits, who launched Heritage Equity Partners in 2008, and Lichtenstein, the firm’s president, began preparing the lodge in 2012 as they expanded their Williamsburg footprint. And although a selection of hotels went into bankruptcy for the duration of the pandemic, the developers’ difficulties commenced in advance of COVID. In 2019, Heritage defaulted on the hotel’s house loan, and Reward Street Partners, the hotel’s loan company, efficiently requested that the New York County Supreme Court docket put the resort into momentary receivership, basically giving an additional person the electrical power to deal with it. But the receiver, who had been nominated by Moskovits, authorized Moskovits to carry on to management the hotel’s earnings, according to Reward Avenue Partners. In February, a report released by a courtroom-appointed examiner for the duration of the bankruptcy approach observed that Moskovits and Lichtenstein experienced engaged in a “complex scheme to divert and siphon sizeable quantities of money” from the lodge. The report also identified that the hotel did not file taxes from 2017 to 2019 and that $68.2 million deposited into a resort manager’s account was not noted to tax authorities. The examiner extra that Moskovits and Lichtenstein unsuccessful to response queries more than the study course of the investigation and interfered in third-celebration subpoenas. In a remark to The Real Deal, Lichtenstein mentioned, “Ownership seems forward to restructuring and paying off all collectors and wrapping up this individual bankruptcy procedure in the close to long term.”
The proprietors disputed the examiner’s report in courtroom papers, as reported by The Wall Road Journal, stating it was “full of mischaracterizations, bogus statements, and outright defamatory and baseless conclusions.” In a deposition, Lichtenstein also said, “I guess Fortress and Profit Street are in a competition on who is the biggest asshole loan company in New York Town, so I feel Benefit Avenue … may gain that one, but we’ll see.” (Fortress is one more of the developers’ lenders that is hoping to foreclose.)
None of this was misplaced on Drain, who noted in a listening to that “some of those people actions” taken by the developers “also surface to me to rise to the amount of fraud,” thus the trustee. The individual bankruptcy situation is ongoing, but factors really don’t look good for the builders, with Drain focusing on Lichtenstein when he claimed bluntly, “I do have some issue that he’ll do anything definitely stupid below.”