German-based lender Deutsche Bank is suing to recover $11.3 million in personal loans it gave to developer Kent Swig at the height of the market.
In the lawsuit — which was filed on Thursday in New York State Supreme Court — Deutsche Bank Trust Company Americas claims Swig borrowed $6.8 million in March 2007 in two separate loans and borrowed another $5 million in October of that year. But, according to the suit, the embattled developer defaulted after paying back only a small portion of the loan with $11.3 million still outstanding.
The bank may, however, have to get in a long line of creditors seeking money from Swig, president of development firm Swig Equities. He is fighting creditors on a number of fronts and last month threatened to file for personal bankruptcy if a $28 million judgment tied to Sheffield57 was enforced.
The Deutsche Bank loans represent a little over half of the $20.7 million in personal loans lenders are trying to recover after showering Swig with their largess between April 2006 and January 2008, court records show.
Citibank filed suit July 10 to recover $4.965 million lent to Swig in April 2006.
And on September 21 a fund known as RCG LV Debt IV Non-REIT Asset won a judgment for $3.9 million for $3.5 million in personal loans lent to Swig in January 2008. The judgment included roughly $400,000 in interest.
Swig could not be reached for comment.
Attorney Edward Mermelstein said it was not unusual for lenders to make personal loans to developers during the boom years when the easy cash was used to attract clients.
“When you are out there and your name is all over the place as a very successful developer, lenders will run after you to lend you money,” he said, referring to that era of lending.
While Mermelstein has no knowledge of Swig’s finances, he said developers might use the loans for anything from funding equity in new projects to buying a boat.