After The One auction flopped, lenders feud over who gets paid

When the super mansion called The One sold at auction in March for less than half of its $295 million list price, it wasn’t just a deal for the buyer: It set the stage for What is becoming a nasty battle between creditors .

The sale of $141 million in 105,000-square-foot real estate to LA fashion mogul Richard Saghian means that some of the major lenders of the bankrupt Bel-Air project could lose money, with claims against properties totaling more than $250 million. Now, one lender has filed a lawsuit claiming unfair business practices against another lender and alleging forgery of documents puts it second in line for repayment.

The lawsuit was filed by the investment firm of Julien Remillard, a longtime associate of developer Nile Niami, in the US Bankruptcy Court last month. The house’s bankrupt limited liability company, Crestlloyd, applied for court permission to pay nearly $104 million of the $138 million in real estate received at auction to another lender, billions of dollars. Los Angeles billionaire Don Hankey.

Hankey Capital is by far the property’s largest creditor, having lent Crestlloyd three loans totaling more than $100 million starting in 2018 when Niami was looking for cash to complete the luxury mansion. The point is to repay the first and the associated interest and fees.

The estate has already paid priority claims such as taxes, and with such a large payment going to Hankey, there will be very little left for other creditors, including Remillard’s Inferno Investments, The company claims it owes $20.9 million. Inferno said it and related entities lent about $18 million to acquire the Airole Street property in 2013 and to begin construction on the then 40,000-square-foot home.

Although Inferno made the loan before Hankey Capital, the lawsuit admits Inferno signed an agreement in 2016 that allowed Crestlloyd to repay the loans needed to complete the mansion before Inferno was repaid his own investment. me.

However, that 2016 settlement also required Crestlloyd to get approval from Remillard, the son of a wealthy Quebec family, for specific loans that would become Inferno’s debt, according to the lawsuit. It alleges that never happened. Instead, the lawsuit claims that Remillard’s signature was forged on an October 2018 subordinate agreement that allowed Hankey to be paid in advance.

In the case, Inferno is asking the Bankruptcy Court judge to move it before the boundary to pay off the estate’s large secured creditors.

The lawsuit does not allege who committed the forgery but says that Niami’s longtime notary publicized falsely that Niami and Remillard signed the document in his presence in Los Angeles when the real Remillard was in Montreal that day. The notary did not return calls for comment.

The lawsuit also accuses Hankey Capital of unfair business practices, including charging exorbitant default rates. Inferno did not object to the payment of $82.5 million in principal on the disputed $104 million payment to prevent the accumulation of interest, although it did reserve the right to withdraw it all from Hankey.

The lawsuit further seeks to declare the 2016 agreement null and void because it alleges that Crestlloyd padded invoices from contractors and suppliers who worked on The One and that the money went to Niami and his ex-wife. brother, Yvonne, for themselves or for their other properties. has been associated with.

It claims Hankey Capital failed to monitor its loans so it could cause more money that would eventually default, generate higher interest rates and put itself in foreclosure. assets – which it did last year, which led to the bankruptcy filing.

Pool deck at The One.

The One’s auction did not bring in enough money to pay back all of the lenders.

(Allen J. Schaben / Los Angeles Times)

Hamid Rafatjoo, an attorney for Nile Niami, mocked the lawsuit, which did not name his client as a defendant, as merely a ploy by the developer’s former investor to cloud the waters. He said it was late in the game to make a claim that Hankey wasn’t the first to be reimbursed because the estate filed for bankruptcy in October.

“This has been outlined in a bankruptcy case since Day One. And only after the sale ended and there was a disappointing selling price, these theories arose,” he said. “At the end of the day, you try to clean up some dirt and see if there’s a settlement somewhere where you can make some money. My client did nothing wrong. He lost between $30 and $40 million of his own money on this project. To say that signatures have been forged or funds have been misused is just a waste of time. “

Yvonne Niami could not be reached for comment.

Hankey said he views the lawsuit as possibly “just trying to get something back”. He said he spoke to “several people” at Inferno a few years ago to finalize the subordinate deal and “that’s absolutely not what they told me on a one-on-one level.”

To pursue his case, Inferno hired prominent litigator Marty Singer, who said a private investigator looked into the transactions, which led to the lawsuit. He defended his client’s decision to file a lawsuit more than six months after The One was placed under bankruptcy protection.

He said that Inferno didn’t care about the order of the payments until the auction took place in March, raising much less money than expected to repay creditors. It has also expressly reserved the right to object to distribution to Hankey.

“The prediction is… they’ll be paid in full, so there’s no point worrying about the priorities of compensation or anything like that,” he said.

David Golubchik, an attorney for Crestlloyd, a defendant in the lawsuit, said the lawsuit halted any further payments to Hankey and would slow down the estate bankruptcy process.

“We will deal with it through the court process, with discovery and deposit and adjudication if necessary,” he said. “We find it odd to claim this position after so many months in Bankruptcy Court.”

The Bel-Air hilltop marble and glass trophy property auction was so disappointing that some creditors managed to set it aside and proceed again, noting that it was held within a few days. a week after Russia invaded Ukraine, sending the market into chaos, potentially scaring bidders. Only five bidders participated in the auction.

However, U.S. Bankruptcy Court Judge Deborah Saltzman declined to do so, noting that the situation was likely to get worse. Her comments have been proven to be valid. While the war was over, inflation heated up, sending the stock market plummeting and the housing market cooling as the Federal Reserve raised interest rates in response.

Meanwhile, Saghian, the owner of fast-fashion retailer Fashion Nova, has been working with city officials to find a way to refinish the house, resolve zoning issues and obtain a storage certificate. residence, a spokesman said.

The One is the biggest new home in Los Angeles and possibly the whole country. It consists of 21 bedrooms and 42 full bathrooms. There is a 4,000-square-foot guesthouse, servants quarters, a moat and multiple swimming pools, a wellness spa, a beauty parlor, a four-lane bowling alley and a full-size cinema, in number a much longer list of luxury amenities .

Byron Moldo, a Beverly Hills commercial bankruptcy attorney who was not involved in the case, said he hopes the lawsuit can delay The One’s bankruptcy settlement for at least six months — all at the same time. increases attorney fees and creates pressure on the parties. a settlement, that might be the idea.

“I think there will be a lot of material to look at. I can see the need for a handwriting expert,” he said. “This is going to get very, very expensive.”

https://www.latimes.com/business/story/2022-07-01/the-one-megamansion-don-hankey-nile-niami-inferno-bankruptcy-lawsuit After The One auction flopped, lenders feud over who gets paid

Edmund DeMarche

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