Swig dealt blow in $32M Square Mile judgment case
October 22, 2009 06:00PM By David Jones
Kent Swig
Developer Kent Swig was denied a motion to reargue or stay enforcement of a $32 million judgment by Square Mile Structured Debt yesterday.
New York State Supreme Court Judge Bernard Fried ruled that Swig failed to prove any legal errors that would allow him to reopen or delay the case. The judgment was issued against Swig after he defaulted on a $28 million personal loan from Square Mile that was used to help develop the troubled Sheffield57 condominium near Columbus Circle. Fried denied the motion despite allegations that Swig was denied access to critical documents and that Square Mile misrepresented key facts to Swig.
Fried ruled that the only way to issue a stay would be if the court "overlooked or misapprehended the facts or the law."
The ruling will likely provide further hardship for Swig and his considerable number of real estate assets, which include Swig Equities, the real estate development firm; Helmsley-Spear, the commercial real estate firm previously owned by Harry Helmsley; and Terra Holdings (where he is co-chairman and co-owner), the parent company of Brown Harris Stevens and Halstead Property.
Officials at Swig Equities were not immediately available for comment.
As The Real Deal previously reported, Swig threatened to file for bankruptcy protection if the judgment was enforced against him, saying he did not have the ability to pay back the $28 million, according to court documents. Swig is facing numerous lawsuits for alleged loan defaults, including a $50 million judgment related to mezzanine loans at his 25 Broad Street condominium conversion, $12 million in loans from Deutsche Bank, a $5 million line of credit at Citibank and a $4.75 million loan at Signature Bank.
As The Real Deal also reported, Swig filed suit in September against Property Asset Management Services, a firm that manages executive compensation for Terra Holdings. Terra was one of at least 40 Swig-related entities that received subpoenas from Square Mile to disclose financial information or freeze payments to Swig until the judgment is satisfied.
On Oct. 9, attorney Y. David Scharf disclosed that he had resigned from Swig's case, but asked Judge Fried to extend enforcement of the judgment by 45 days, while Swig searched for new lawyers. Scharf noted in the court filing that Swig was unable to pay his legal fees because of the post-judgment restraining notices.
"I don't turn people out on the street," Scharf told The Real Deal. "We asked the court to give them additional time to respond."
Scharf asked Fried for a similar delay in the blockbuster lawsuit by Yair Levy and Serge Hoyda that claimed Swig embezzled millions of dollars in construction funds from Sheffield57. The court refused to block the Aug. 6 auction of Sheffield57 to Fortress Investment Group, and discovery is set to begin for a trial to determine whether Swig defrauded his former partners in the condo.
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Comments
Anonymous
The most significant point is that Kent Swig's lawyer is being paid and wants to quit. Someone with "inside" information of Swigs finances and, if he knows there are no assets left to pay him, then there are no assets left for anyone!
Comment #1 Posted By: Anonymous 10/23/09
Anonymous
Is the defendant in a civil case entitled to a public defender?
Comment #2 Posted By: Anonymous 10/23/09
Anonymous
Reargue the case? Why can't the guy just be honest and admit that he never had a contingency plan if the market tanked and he was left holding the bag? He gambled everything on anticipated positive cash flow that never materialized. Isn't that the bottom line?
Comment #3 Posted By: Anonymous 10/23/09
Anonymous
bye bye Swiggie. what goes around comes around. btw there arent public defenders for civil lawsuits
Comment #4 Posted By: Anonymous 10/23/09
Anonymous
Swit forgot the eternal rule - bulls get rich, bears get rich and hogs get slaughtered. He was a hog - big time.
Comment #5 Posted By: Anonymous 10/23/09
Anonymous
He's a lawyer, right? Let him defend himself.
Comment #6 Posted By: Anonymous 10/23/09
Anonymous
One can only hope that Swig ends up in jail. He's a miserable arrogant bully, and deserves everything that that's happened to him.
Comment #7 Posted By: Anonymous 10/23/09
Anonymous
I don't know the guy, but, from reading Real deal thesepast months, it seems he does not have any fans
Comment #8 Posted By: Anonymous 10/23/09
Anonymous
its just the same couple of posters... who post endlessly... and are upset because Swig wouldn't pay them $1,000,000 to move out of their Sheffield apartment when their free market lease expired. Shameful.
Comment #9 Posted By: Anonymous 10/23/09
Anonymous
I would NOT want to be a real estate agent working for BHS or Halstead that has to respond to a seller or buyer question about why it is that the OWNER of their operation DOESN'T PAY DEBT BACK. Nope- wouldn't list my place with a company under that big, black cloud.
Comment #10 Posted By: Anonymous 10/23/09
Anonymous
I am an owner in the Sheffield. Love the location, hate Swig and everyone at Swig equities. The culture comes from the top. It was deeply dishonest and Swig deserves what he will get. Sorry Number 9, this goes way beyond the renters. BTW... Mr. Swig I am not done with you yet.
Comment #11 Posted By: Anonymous 10/23/09
Anonymous
O' Swiggie, you knuckle head! It's just a hundred million dollars. Why your just one Mega Millions lottery win away from redemption! After all, you always were a big player, right?
Comment #12 Posted By: Anonymous 10/23/09
Anonymous
I bet Costa Rica is starting to look really good to Swig about now.
Comment #13 Posted By: Anonymous 10/23/09
Anonymous
Hmmmm.... same IP addresses for ALL of the nasty comments... I wonder....
Comment #14 Posted By: Anonymous 10/23/09
Anonymous
number 14 you are fishing
Comment #15 Posted By: Anonymous 10/23/09
Anonymous
Dear #14 - (or do you prefer Steve?) - as you know, there is no IP address identification on Real Deal. Kthxbye.
Comment #16 Posted By: Anonymous 10/23/09
Anonymous
Ding dong, the Swig is dead, the wicked old Swig....
Comment #17 Posted By: Anonymous 10/23/09
Anonymous
does he still have those knuckleheads in his sales team working for him?
Comment #18 Posted By: Anonymous 10/23/09
Asbest-Dosed
His lawyer's bailing?! OMG, next go all his political buys, bye, bye...
Comment #19 Posted By: Asbest-Dosed 10/23/09
Anonymous
Why are all the comments from the same IP address? It is the same poster over and over and over again. Probably Kent fired someone for stealing or incompetence and this is their attempt at revenge.
Comment #20 Posted By: Anonymous 10/24/09
Anonymous
#20 , get serious , unfortunately he believed his own self generated press, went wild on acquisitions and promises to investors and debt and now cant come thru to them .I understand that he hasnt paid his office staff claiming the asset freeze.I understand that by filing BK he losses control but then again what does he control now anyway. Filing for the courts protection would at least stop this bleeding and allow him to pay the reasonable costs of staying in business and paying his people.
Comment #21 Posted By: Anonymous 10/24/09
Anonymous
He'll come out of this. He has the assets to repay all of his liabilies with room to spare. A creditor will have a big incentive to make a deal because they will at the end recover 100 cents on the dollar. When the economy comes back the commercial real estate he owns will eventually appreciate so that the losses on the two residential deals will be a cost of a successful gamble on many highly leveraged deals.
Comment #22 Posted By: Anonymous 10/24/09
Anonymous
Yep - totally agree with the last poster. It does seem like all of the negative posts are coming from the same person.
Comment #23 Posted By: Anonymous 10/24/09
Anonymous
That's very witty, the last commenter posting multiple times. His lawyer is dropping him. He clearly doesn't have the assets to cover his debts. Whatever the Swig family holdings are worth, he clearly doesn't have access to unlimited income from them. That's not to say that he couldn't simply sell his apartment and his Hamptons spread, for starters, to cover his debts. And, what's more, no one will ever loan to him again without a recourse loan that is personally guaranteed by his own family assets. And when the market does come back, or even before it does, all the developer entities that didn't make stupid, grossly overvalued purchases in the last five years will have the cash to buy up the attractive properties cheap, long before he has the resources to do so. If he survives, he will be a bit player in New York, little trusted by lenders or partners or tenants.
Comment #24 Posted By: Anonymous 10/24/09
Anonymous
First of all this is my second post, the first being number 22. Second, as someone who has seen a lot of workouts and many economic cycles, I think things will work out successfully for Kent Swig. That is my view and others can have different views.
Comment #25 Posted By: Anonymous 10/24/09
Anonymous
Oh , and where did the brilliant Sales manager and sales staff go?
Comment #26 Posted By: Anonymous 10/25/09
Anonymous
You mean the sales staff that sold more apartments than any other project in the last 2 years? Fortress/Swig are keeping them on. They did no wrong other than outselling the market since the project's inception.
Comment #27 Posted By: Anonymous 10/25/09
Anonymous
ok I guess 48% sold since fall of 2006 is a great job? really? I thought Rose was taking over the building
Comment #28 Posted By: Anonymous 10/25/09
Anonymous
Number 28 or should I say Sophia. We are not done with you either. When we sue for fraud, we will include you.
Comment #29 Posted By: Anonymous 10/25/09
Anonymous
Lets go Yankees!!!!
Comment #30 Posted By: Anonymous 10/26/09
Anonymous
#29 Revenge is sweet!
Comment #31 Posted By: Anonymous 10/27/09
Anonymous
Swig obviously was a novice in all his residential business dealings down to who he hired and fired all the worong people in all the wrong places, sheffield57 could have been a success, sales started in 2006 still during the real estate boom, but it was a marketing disaster in part to the person whom he hired as a sales director, I think she is long gone, just Bad decisions all the way around and the people who where loyal, ultimately got screwed
Comment #32 Posted By: Anonymous 10/27/09
Anonymous
Novice? He sold more apartments in 2007-2008 in one project than ANY other developer in the City. And then he orchistrated the greatest debt purchase of any project in New York City (at least during this Great Recession) with one of the largest hedge funds in the world. Love him or hate him, it is an impressive accomplishment.
Comment #33 Posted By: Anonymous 10/29/09
Anonymous
hate him.... it was not a great accomplishment.... it was a desperate move from a desperate man
Comment #34 Posted By: Anonymous 10/29/09
Anonymous
It was brilliant. We in the industry know that the Fortress deal was a major, major move to save his equity/profits/partners, even though his partners are not so good guys. We look on with envy and awe on this stand-alone transaction.
Comment #35 Posted By: Anonymous 10/30/09
Anonymous
#35, you should write for Leno
Comment #36 Posted By: Anonymous 10/30/09
Anonymous
I think #35 already has a full-time job posting that Swig is such a benificent genius.
Comment #37 Posted By: Anonymous 10/30/09
Anonymous
re: #33 "he orchistrated the greatest debt" nuf said
Comment #38 Posted By: Anonymous 11/04/09