A day before the scheduled UCC foreclosure sale of its trophy Bushwick rental project, Yoel Goldman’s All Year Management filed a lawsuit in an attempt to block it from going forward.
In the suit filed Thursday in Kings County Supreme Court, the Brooklyn developer accuses mezzanine lender Mack Real Estate of violating a forbearance agreement the parties reached in July by refusing a $7.5 million payment that would reinstate the loan.
Mack “has refused to proffer an accurate payoff, or accept payment under its reinstatement agreement, because it seeks to wrest the property from plaintiffs at a steep discount,” All Year’s complaint alleges. “In effect, it is scheming to prevent Plaintiffs from paying off the mortgage as part of a scheme to unlawfully obtain the Property.”
Goldman’s firm is seeking a permanent injunction barring the UCC foreclosure sale, and/or a judgment for damages of at least $70 million.
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Mack’s lawyers reacted quickly to All Year’s emergency order to show cause, filing an extensive response on the same day.
“Plaintiffs submit no evidence to substantiate the assertion that either Plaintiff [Goldman or his LLC] attempted to make any $7.5 million payment to Mezzanine Lender,” Brian Hail of Goodwin Procter LLP wrote in a letter to the court. “The evidence shows that they did not make any payment.”
Filings show that during a Thursday hearing, the court told the parties that the sale would not be allowed to proceed as scheduled if All Year made a $3.5 million payment to Mack by 5:30 p.m. The borrower would also be required to pay $4 million the following week.
As of 8 p.m yesterday, Mack said it had not received any payment. “I have requested payment confirmation and identifying information from Plaintiffs’ counsel, but no confirmation or information has been supplied,” Hail wrote in a second letter to the court.
Representatives for All Year and Mack did not respond to requests for comment.
In addition to the $65 million mezzanine loan on phase two of Denizen Bushwick, All Year is in default on a $170 million senior loan for the property provided by JPMorgan Chase.
Phase one of Denizen, a 750-unit rental complex, serves as collateral for the Series E bonds that All Year has issued on the Tel Aviv Stock Exchange. Trading on All Year’s bonds was suspended in January, a month after the company missed a bond payment and delayed its quarterly financial reporting.
On Monday, All Year disclosed on TASE that the tenant entity at the William Vale hotel and office complex in Williamsburg would not make its scheduled $7.5 million biannual rent payment. Both the tenant and landlord LLCs at the William Vale — which backs All Year’s Series C bonds — are partially owned by Goldman.