Cornell Realty Management’s Isaac Hager is back in bankruptcy court. This time around a minority stake in a Midtown building that has been trying to avoid foreclosure.
The entity in which Hager owns a 15% stake in Churchill Real Estate’s Penn Plaza building at 257-263 West 34th Street filed for Chapter 11 bankruptcy Wednesday in Brooklyn. PincusCo was the first to report the application.
FIA Capital Partners’ David Goldwasser is listed as a bankruptcy expert and chief restructuring officer with a reputation for leading New York City developers to Westchester County bankruptcy courts. Goldwasser played the same role Hager had two years before him when he bankrupted the Tillary Hotel in downtown Brooklyn.
According to the bankruptcy filing, Hager has put about $7.5 million into Churchill’s project, and while the building is empty due to Covid, it has “a potential value equal to or greater than about $52 million in mortgage debt. There is.”
No other investors in the property have filed for bankruptcy, Churchill’s attorney Robert Tolchin said. genuine article.
Churchill is struggling to secure tenants for the building, partly due to the effects of the pandemic and crime in the surrounding area. Both 7-Eleven and Merck have withdrawn potential leases following robberies and stabbings nearby.An employee of Kolb Radiology, one of his two companies that rented the space, said: I was attacked outside the facility during a delivery. (Bloomberg reported last week that perceptions of crime in the city are ahead of reality.)
Churchill says he has spent about $90 million on office and retail buildings since 2016. But the pandemic hit New York office and retail leases as the project neared completion after Churchill received his temporary certificate of occupancy in 2019.
Churchill enlisted Avison Young in 2020 to help find potential residents for the building. The company took his 40% of the allotted square footage, which was not enough for Churchill to make his monthly payments.
After Churchill missed his monthly payments in April 2021, the building’s senior lender declared default on the loan and began charging default interest two months later. Marathon Asset Management provided Churchill with his $52 million in three loans in 2019 to refinance the project’s debt and complete construction.
Marathon filed for foreclosure in state court last September. Churchill argued that Marathon could not sue foreclosure because the Cayman Islands paper company that held the debt was not registered to do business in New York at the time.
“We’ve all been through hell, but we can come back.”
In response, Marathon said the entity only held a loan on the project and did not meet state registration requirements. Did.
In January, a state judge appointed a trustee to take over the estate and forced Churchill to turn over his books, keys and bank accounts. Transferred to court.
Marathon previously claimed Churchill owed about $56 million, which includes $4.6 million in interest.
Torchin described the marathon as “vulture” and said the loan should have been restructured given the pandemic.
Churchill’s lawyer said, “We’ve all been through hell, but we can all come back. We didn’t mismanage the building.”
Hager and his attorney did not comment prior to publication.
A dealmaker who survived lawsuits and foreclosures after the Great Recession and became one of Brooklyn and Queens’ most active developers, Hager is no stranger to bankruptcy and foreclosures.
Hager has spent the better part of two years fighting to keep the Tillary Hotel out of lenders’ hands. He recently asked a judge to block his senior lender, Ohana Real Estate, from proceeding with a bankruptcy sale this month.
Hager partnered with friend Ripa Rubin in 2019 to purchase Tillary, a 174-room hotel and 64-unit apartment located at 85 Flatbush Avenue extension. When the pandemic hit, the hotel turned into a haven for homeless men.
Hager bankrupts the hotel and a 26-story hotel and residential tower at 159 Broadway in Williamsburg and prevents the foreclosure of mezzanine lender Eli Tabak by the Bluestone Group. Tabak, who held his $6 million mezzanine loan on his Downtown Brooklyn estate, filed for foreclosure on his UCC in August 2020.
Hager is the grandson of the late Rabbi Mordechai Hager, a longtime leader of the Viznitz Hasidic sect. Isaac, also known as “Itzy,” launched real estate firm North Development Group in the mid-2000s, and the founder of diamond trading and real estate firm Dynamic Diamonds, he began partnering with Chaim Lax.