Real estate investor Robert “Toshi” Chan said he plans to move forward on his controversial hospitality and entertainment business after turnaround specialist DelShah Capital gave up it’s long-running court battle to take control of the Flatiron Hotel.
DelShah, led by chief executive Michael Shah, withdrew a legal maneuver to take control of the boutique property after a state Supreme Court judge signaled plans to rule again in favor of the hotel owners.
“The mortgage has been paid off and the foreclosure discontinued ,” Shah told The Real Deal in an emailed statement. “The litigation over the contract has currently been settled.”
Hudson Realty Capital, a Manhattan-based fund led by David Loo and Richard Ortiz, refinanced the debt, according to Shah and confirmed through documents filed Dec. 30 with the New York City Department of Finance.
DelShah fought a pitched battle to take over the boutique hotel at 1141 Broadway, after acquiring the defaulted $8 million mortgage debt and later entering a $31 million deal to buy the property from George Hourani. DelShah did the deal with Hourani, the head of construction firm Born to Build, in May 2013, after that contractor won a $3 million court judgment from Ibrahim Saleh, who DelShah says was a member of the hotel’s ownership group.
In December, the remaining owners of the Flatiron filed a motion to dismiss the suit, claiming that the judgment against Saleh, who fled the country following a federal conviction on an unrelated fraud case, could not be enforced. Jagdish Vaswani, one of the hotel’s owners, argued that the hotel sale was invalid, because Saleh was not authorized make decisions for the property.
“Put simply, DelShah’s action is an attempt to force the true owner of the Flatiron Hotel [Vaswani] to sell to DelShah the property based upon a purported agreement which was signed by someone who does not own the property and therefore had no authority to enter into the agreement,” said attorney Ronald Francis, in a Feb. 5 court filing.
In a settlement agreement dated Feb. 10, DelShah withdrew the complaint and canceled the notice of pendency against the hotel, and agreed to pay $10,000 in legal fees to the hotel owners. According to the agreement, DelShah does not admit any wrongdoing.
Shah told The Real Deal that he still believes “that there is ample evidence” that Saleh is the true owner of the hotel, but admits that the judge was about to throw the case out.
Meanwhile, Toshi, who managed the hotel through a lease deal with the owners, said he plans to continue running the hotel, noting he will expand his hospitality business. Last year, Toshi agreed to pay $1 million to settle a lawsuit with the city of New York over his illegal extended stay hotel business.
“The end of all of the litigation surrounding the Flatiron Hotel means I can now expand my hospitality and entertainment business on solid ground,” said Toshi. “The seller, Jay Vaswaini, honored his deal to me despite intense pressure and at great cost.”