Kuafu Properties just learned the hard way that dissolving a partnership can be far more difficult than forming one.
A judge dismissed the New York-based Chinese developer’s petition to cut ties with estranged partners Sean Ludwick’s Blackhouse Development and Siras Development, in a decision reached April 14 and publicly filed Wednesday. This means a bizarre series of lawsuits between the three firms over the 47-story hotel and condo development Hudson Rise is likely headed for another round.
In dismissing the petition, the New York State Supreme Court said it doesn’t have jurisdiction over the Delaware-based entity Reedrock Kuafu Development Company LLC, which Kuafu is hoping to dissolve. It also pointed out that a dissolution isn’t backed by 75 percent of the partnership’s members, as is stipulated by the founding agreement.
In November 2013, Kuafu formed a partnership to buy a $115 million development site at the corner of 38th Street and Eleventh Avenue. Siras, a firm headed by former Blackhouse partners Ashwin Verma and Saif Sumaida, and Blackhouse each made up a quarter of the partnership, while Kuafu made up the remaining half.
The partners planned to build a 47-story condo and hotel tower on the site, dubbed Hudson Rise, but they soon fell out. In February of this year, Kuafu filed a petition to dissolve the partnership. The firm claimed that Ludwick and Siras had contributed a mere $7.5 million to the total $96 million in equity raised for the project, and agreed to an “unreasonable and excessive” brokerage fee for a potential $20 million loan. The final straw, according to the petition, was Siras’ and Ludwick’s decision to hire brokerage Compass as exclusive sales agents for the building, allegedly without consulting Kuafu.
A month after the petition was filed, Ludwick sued his former colleagues Verma and Sumaida for allegedly cutting him out of projects, seeking $15 million in damages. And then, on March 19, Siras hopped on the lawsuit merry-go-round, suing Kuafu for allegedly plotting to kick its partners out of the project in breach of their agreement.
