Mulberry Development, a general contracting and development firm, filed for Chapter 7 bankruptcy on June 7, delaying the June 10 start date for a trial in a yearslong legal battle.
Mulberry Development gained traction in the 2010s, serving high-end clients as both general contractor and developer. The firm’s construction and renovation projects included the Ace Hotel, former NoMad Hotel and now-defunct Playboy Club NYC.
But the company has been out of operation for “approximately five years,” according to emails sent by Mulberry Development’s lawyer Stuart Zisholtz published in recent court filings.
The lack of activity and bankruptcy both had roots in a $10 million lawsuit in 2016 related to halted construction at a high-end gym at 90 Fifth Avenue in Union Square, Robert Lavecchia, Mulberry Development’s president, said.
“There’s only so much money we could dump in attorney’s fees against someone who has unlimited funds,” Lavecchia said.
The planned 25,000-square-foot gym was the brainchild of celebrity trainer Joe Dowdell and reportedly financed, in large part, by Dowdell’s client and former Alphabet CEO and chairman Eric Schmidt, before Schmidt left the deal in April of 2016.
Mulberry Development signed a construction contract in September 2015 to build a brick-and-mortar gym called Peak Perform. The gym was to be state-of-the art, a successor to Dowdell’s first business, a gym in the city with the very similar name of Peak Performance at which Claire Danes, Anne Hathaway, Jimmy Fallon and Schmidt were regulars, according to the New York Post’s Page Six.
TSFV Holdings LLC represented the project’s lender, who, according to the Post is Schmidt. The firm provided financial backing, including the $10 million security deposit.
Disagreements over payment and work completed led Mulberry to walk off the job in January of 2016 and file liens against the building. Later, Dowdell defaulted on the lease, and disputes over the liens, work completed and the project’s overall failure followed. In May of that year, TSFV Holdings filed a lawsuit against Mulberry Development on behalf of its own interest and on Peak Performance’s behalf.
Proceedings continued for eight years. Resolution seemed near, with June 10 set for jury selection. Then came the Chapter 7 filing.
TRD profiled Lavecchia’s former partner at the firm, Michael Buono, in 2018. At that time, Lavecchia managed Mulberry Development’s staff and construction while Buono oversaw finances and deals. The two also jointly managed New York Renaissance Group, a separate development firm.
The lawyers representing the plaintiffs – TSFV Holdings and Peak Performance NYC – were determined to proceed with a trial against Lavecchia, according to court documents filed on Sunday.
“Counsel is grasping at straws,” Mulberry’s lawyer Zisholtz wrote in a Friday email to the court.
Mulberry’s assets total about $1 million and are made up almost entirely of mechanic’s liens. Liabilities amount to more than $3.2 million in claims against the firm by 10 creditors, including contractors, insurers and attorneys, according to the Chapter 7 filing. The largest creditor is the Small Business Administration, which lent the firm $2 million.
“After any administrative expenses are paid, no funds will be available to unsecured creditors,” the filing stated.
The lawsuit is still active. Lawyers representing TSFV and Peak Performance did not respond to requests for comment.
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