Developer Joe Moinian filed a lawsuit on Monday to block the scheduled auction of Dwell95, his luxury rental building at 95 Wall Street, however a last minute bankruptcy filing by the mezzanine lender has postponed the proceeding.
Monian’s Moinian Group, one of the city’s biggest real estate development companies, filed suit in New York State Supreme Court against Rubicon Finance America, which held a $42 million mezzanine loan on the 507-unit property in the Financial District.
Moinian had a $227 million construction loan on the building from Credit Suisse-unit Column Financial, but the value of the property fell below the loan balance due to the 2008 economic downturn, which put the mezzanine loan into default, according to the complaint.
Moinian alleges he reached an agreement with Rubicon and Credit Suisse to buy the $42 million mezzanine loan for $1 million, but he says on Dec. 10 that Rubicon agreed to sell $1.4 billion in loans, including the Dwell95 loan , to a joint venture firm that included FBE Limited and Lane Capital Management.
Right after the sale, Moinian alleges that FBE and Lane Capital scheduled a Dec. 30 auction to foreclose on 95 Wall Street and basically deprive him of the chance to buy back the defaulted mezzanine loan.
“FBE did not notice or advertise the purported sale, which is set for Dec. 30, 2009, one day prior to New Year’s Eve, until at the earliest a scant 12 days prior thereto,” attorney Stephen Meister, who is representing Moinian, wrote in the complaint.
Moinian was not immediately available for comment.
Meister alleged that the lenders hired no broker to market the sale, and reserved the right to reject all bids, making the Dec. 30 auction a “sham.”
One day before the Dec. 30 auction, however, Rubicon filed for Chapter 7 bankruptcy protection in the U. S. Bankruptcy Court in Chicago, according to documents obtained by The Real Deal. Chapter 7 bankruptcy allows a company to liquidate its assets rather than negotiate with creditors and reemerge.
Court documents show that Rubicon has assets of $15 million, mainly loans, and liabilities of $65 million.
Attorney James Irving, representing Rubicon in the bankruptcy filing, declined to comment. A spokesperson for Rubicon was not immediately available for comment.
Meister, who was overseas, told The Real Deal in a telephone interview that the bankruptcy filing would put the auction on hold, but he was proceeding with the complaint.
“The auction has been postponed, Meister said. ”My lawsuit has not stopped.”
Herrick Feinstein attorney Gary Eisenberg, representing FBE, was not immediately available for comment.