The Real Deal New York

Kuafu accuses Siras of treating former Hudson Rise partner as “dumb money”

Amid legal disputes, Chinese developer buys UBS loan to foreclose on 11th Ave. property

May 11, 2015 06:00PM
By Mark Maurer

Kuafu Siras

From left: Shang Dai, rendering of Hudson Rise at 462-470 11th Avenue, Saif Sumaida and Ashwin Verma

Despite a judge’s dismissal of Kuafu Properties’ petition to cut ties with its Hudson Rise partners, the New York-based Chinese developer isn’t backing down.

Late last week, Kuafu, led by CEO Shang Dai, filed a counterclaim in New York State Supreme Court against Siras Development, accusing it of treating Kuafu as “dumb money.” The counterclaims include allegations that Siras fraudulently induced Kuafu to partner up to develop the 47-story condo-hotel at 462-470 11th Avenue in Hudson Yards; grossly mismanaged the project; and repeatedly refused to consult with Kuafu on key decisions.

“The Siras parties consistently treated Kuafu as ‘dumb money’ a mere source of off-shore investment funds with which the Siras parties could do as they please, rather than include Kuafu in project decisions as equal development partners, as clearly provided in the operating agreement,” the counterclaim states.

In an effort to prevent “loan-to-own” lenders from buying a $46 million loan from UBS Real Estate Securities and foreclosing on the property, an affiliate of Kuafu acquired the loan last month, the documents state.

Kuafu claims that despite the turmoil, it offered Siras and BlackHouse Development chief Sean Ludwick, also a member of the partnership, an opportunity to jointly participate in the ownership of the loan. Neither Siras nor Ludwick responded to the request, Kuafu alleges.

The counterclaim is in direct response to Siras’ March lawsuit in which principals Ashwin Verma and Saif Sumaida allege that Kuafu allegedly plotted to kick them out of the project in breach of the agreement. Ludwick was not named as a defendant in the suit or in the counterclaim.

In a statement provided to The Real Deal, Verma said: “Kuafu’s response to our lawsuit seems to largely restate their dissolution case against us which was recently dismissed. We look forward to proving our case in court.”

The first round of litigation arrived in February, when Kuafu petitioned to dissolve its partnership with Siras and Ludwick.

A judge dismissed the petition last month, saying 75 percent of the partnership’s members would need to support a dissolution, as stated in the agreement.