Real estate investor Victor Chera, of V.C. Realty Management, has filed a breach of contract suit against his brother.
Victor Chera alleges that Michael Chera, who runs Chera Realty and Development, defaulted on more than $16 million in loans connected to a 2006 settlement agreement and the sale of Victor’s stake in Chera Realty.
The suit, filed Jan. 31, in Manhattan Supreme Court, seeks at least $20 million for each breach of contract.
According to the complaint, Michael in June 2006 signed five promissory notes, including two to VC Realty for $500,000 and $4 million, two $6 million and one $300,000 to Victor. The complaint states that while the $500,000 note was repaid the rest of the notes remain outstanding.
The filing alleges that Chera Realty could not exceed $12.49 million in financing without prior permission. Further, the suit claims that if the limit was breached the firm was required to prepay half of the amount that was over the limit to the plaintiffs.
Lawyers for Michael Chera say that he fully intends to repay the loans back within the next 60 days and that Victor Chera is trying to get a “bigger payoff” than he is entitled to.
“This is a mean spirited, frivolous lawsuit brought by a disgruntled sibling and motivated by sour grapes,” said attorney Gary Lerner, who represents Michael Chera. “Victor Chera regrets his decision to sell his minority interest in his brother Michael’s enormously valuable real estate business.”
The suit alleges that property located at 523, 440 and 405 Fulton Street, all Fulton Mall commercial properties owned by Chera Realty, were sold to a successor company called Allied Property in December 2006, which was recorded in public records by November 2007.
According to the suit, Allied Property entered an agreement with Banco Popular for a gap mortgage for $10.34 million, which was consolidated with other mortgages on the 523 Fulton Street property, forming a single lien for $15.85 million.
By October 2012, a new agreement consolidated various liens against 405 Fulton Street to form a lien of $6.37 million. The suit claims that Chera Realty was therefore subject to financing of $22.25 million but failed to notify the plaintiffs.
Under the 2006 settlement deal, the defendants were required to prepay $4.87 million to the plaintiffs, which represents half of the $9.7 million over the limit set by the agreement. According to the complaint a default notice was sent to the defendants in April 2013.