The Real Deal New York

Settlement reached in Chaim Miller’s sale of 45 John Street

Property will be auctioned starting at $73 million

October 30, 2015 05:27PM
By Kyna Doles

Josh Zegen and 45 John Street

Josh Zegen and 45 John Street

A settlement agreement was reached Thursday in the dispute over Brooklyn investor Chaim Miller’s troubled condominium conversion 45 John Street.

Under the terms reached by a slew of creditors and former business partners of the Brooklyn investor, the Financial District property will be auctioned off on Dec. 1., with a stalking horse bidder for $73 million.

Orin Management’s HS 45 John LLC was in contract to acquire the 81,000-square-foot residential property last year from Miller for $66 million, but filed for bankruptcy protection after Miller attempted to back out of the deal. Orin was already in possession of the 14-story building, and made a $14.3 million down payment.

Orin, led by principal Harry Sohn, will receive at least a $13.1 million payout from the sale plus all existing cash reserves, according to the settlement agreement, and all parties will receive a larger payout should the winning bid exceed $73 million.

Josh Zegen’s Madison Realty Capital, which holds the debt on the property, is expected to receive at least $53 million. Miller and his partner Sam Sprei are responsible for paying the accrued interest from September through November.

The settlement will also provide at least $1.5 million to Chun Peter Dong, Miller’s partner in 45 John Street. Dong filed a lawsuit against Miller in February, alleging his partner embezzled Orin’s down payment to buy out Chinese developer Bo Jin Zhu in four Brooklyn properties, and never informed him of plans to sell 45 John Street to Orin.

Nearly a dozen Asian investors also sued Miller, claiming they loaned money but were never repaid. Those individuals, who also alleged they didn’t receive their entitled interest in the property, will receive at least $4 million from the sale, according to the settlement terms.

“[The creditors] are glad they have reached an agreement with all of the parties, and they believe the settlement and the upcoming auction will provide the best opportunity for them to recover the most from their investment,” said Eric Snyder, an attorney representing the Asian investors. Snyder, of Wilk Auslander, said the parties are in the process of retaining a broker to market the property.

Miller acquired the building for $60 million in March 2014 with plans to finish the long-stalled condo conversion of the units. Those plans never materialized, however, and Miller was back in contract to sell the property just six months later. Dong and the creditors claimed in their lawsuits they were left in the dark on the sale, and Orin alleged in its bankruptcy case that it had no idea Miller stopped making payments to Madison.

Miller, who owns at least 17 properties across the city, has been hit with 18 lawsuits from at least 29 individuals and entities. He could not be reached for comment, but a source familiar with the controversial investor claimed Miller was satisfied with the terms of the settlement.

The buyer of 45 John is excepted to close on the deal by the end of the year, according to the settlement agreement.