The Real Deal New York

Beninati accuses Kalikow of “calculated scheme” to take over Sutton Place project

Bauhouse chief says his lawyer -- a cousin of the lender -- used insider information against him

April 07, 2016 11:50AM
By Katherine Clarke

Joseph Beninati, Richard Kalikow and a rendering of 3 Sutton Place

Joseph Beninati, Richard Kalikow and a rendering of 3 Sutton Place

It seems the battle for control of one of the city’s most talked-about development sites has only just begun.

Bauhouse Group chief Joseph Beninati plans to take legal action against lender Richard Kalikow for allegedly conspiring to wrest control of his planned residential tower at 3 Sutton Place, he said in documents filed with the United States Bankruptcy court Wednesday.

Beninati alleges that Kalikow, his lender on the $1 billion condo project via his company Gamma Real Estate, engaged in a 15-month-long “calculated scheme” designed to sideline him from his own development, using insider information obtained from Beninati’s own lawyer, who also happens to be Kalikow’s cousin.

“Manipulative actions taken by the lender to sidetrack the debtor forced the debtor into an untenable situation that made it virtually impossible to refinance its debt and develop the project,” Beninati wrote in the documents.

A spokesperson for Kalikow declined to comment, while a Bauhouse spokesperson was not immediately available.

Kalikow’s moves allegedly forced Bauhouse into filing for bankruptcy protection to protect the building from foreclosure. BH Sutton Mezz LLC, the sponsor of the project, filed for Chapter 11 in February, temporarily staving off an auction. BH Sutton Mezz lists its current assets at $181.35 million and its debts at $139.42 million. The company is seeking permission from the courts to restructure its business arrangements and debts and to propose a reorganization plan.

Beninati also alleges that Kalikow forced himself into the role of joint venture partner, despite holding zero equity in the project. He controlled which creditors got paid, how much they got paid, dictated what apartments in the 68-story Sir Norman Foster-designed tower should look like, changed architectural drawings and even berated some of Beninati’s consultants and engineers, the Bauhouse chief claims.

Beninati said he plans to file suit against Gamma for breach of contract, prefabricated default and fraud, among other charges.

Gamma lent roughly $147 million on the site at 428-432 East 58th Street, which was recently appraised by Cushman & Wakefield as being worth nearly $270 million.

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