Levy and Hoyda set to argue in court for a receiver at Sheffield57
July 07, 2009 06:15PM By David Jones
Kent Swig
Just weeks after Fortress Investment Group filed to foreclose on a $70 million mezzanine loan at Sheffield57, a state Supreme Court judge is set to hear arguments by investors Yair Levy and Serge Hoyda tomorrow morning to appoint a receiver at the troubled condominium.
In a June lawsuit, Levy and Hoyda alleged that developer Kent Swig misappropriated more than $50 million in construction funds at Sheffield57 and made critical decisions about the condo conversion without their consent or approval.
Levy and Hoyda, who control about 70 percent of the building ownership [with Swig and other investors controlling the remaining interest], claimed the foreclosure would wipe out their $17 million investment in the building.
However, a group of 100 condo unit owners at Sheffield57 filed an amicus brief opposing the appointment of a receiver, arguing that the three partners are engaged in a blood feud and Swig, Levy and Hoyda do not have the best interest of Sheffield57 at heart.
"It is abundantly clear from their submissions in connection with the instant application, that none of the sponsor principals have the best interests of the owners group or the condominium in mind and that none of them come to this court with clean hands," said the Sheffield owners' attorney Robert Braverman in a court filing.
Braverman argues that the "white knight," Fortress, has agreed to pay the $5.4 million in outstanding common charges, pay the $17 million in outstanding mechanics liens and would pour millions of dollars into Sheffield57 to complete construction of the project.
Fortress agreed in June to buy a $70 million senior mezzanine loan from Guggenheim Structured Real Estate and a $32 million senior loan from Wells Fargo after Swig defaulted on those loans. Fortress notified Swig in a June letter that it would foreclose on the loans and offer them for sale in an August 6 auction. Under this so-called uniform commercial code foreclosure, Fortress will take over the property unless another bidder successfully buys the loans during the auction.
Sources say that Fortress has retained Rose Associates, the former owner of the Sheffield57, at 322 West 57th Street, to help supervise the renovation of the building. Analysts estimate that more than $50 million is required to complete the construction of common areas and the upper floors at Sheffield57.
A spokesperson for Swig declined to comment, but in an affidavit obtained by The Real Deal Swig denies charges leveled in the Levy suit and argues that a receiver is not in the best interest of the property.
"While the project initially proceeded smoothly under guidance of SE Management [a Swig Equities affiliate], as microeconomic issues began to weigh heavily on the project in late 2007, and into 2008, plaintiffs tried to capitalize on the company's misfortunes to seize control of the project from the SE defendants," Swig stated in the affidavit.
Swig alleged that Levy and Hoyda began accusing him of diverting or misappropriating funds and began to unreasonably withhold consent on decisions that Swig claims did not require consent. He also alleged that Levy and Hoyda gave up some approval rights at Sheffield57 after Swig loaned them $8.4 million in 2006.
Stephen Meister, attorney for Levy and Hoyda, was not immediately available for comment.
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Comments
Anonymous
Oh, this is going to be good. Levy is totally underwater in all of his deals - he is probably fighting to put food on his table and keep his mistresses happy.
Comment #1 Posted By: Anonymous 07/07/09
Anonymous
Her name is Bubba...she has lots of friends...
Comment #2 Posted By: Anonymous 07/07/09
Anonymous
His mistress is distress.
Comment #3 Posted By: Anonymous 07/07/09
Anonymous
Yair's "career" is so finished. He will never develop anything in this town again. Guess treating EVERYONE like sh*t for all these years and screwing over all of his banks and business relationships is coming back to bite him in the butt. Karma is a b!tch.
Comment #4 Posted By: Anonymous 07/08/09
Anonymous
Swig is a loser too. All of his projects are going to sh!t
Comment #5 Posted By: Anonymous 07/08/09
Anonymous
pigs get slaughtered - best real estate market in generations and these guys could sell out. Had they just set their price point lower they would have sold out in a month.
Comment #6 Posted By: Anonymous 07/08/09
Anonymous
#5 is clue less. Kent Swig is clearly underwater. Personal Guarantee with Signature Bank for $5 million, Personal Guarantee with Square Mile for $21 Million. Lehman Brothers is auditing 25 Broad Street and is believed to be looking into Criminal Charges. Surf Up.
Comment #7 Posted By: Anonymous 07/08/09
Anonymous
Swig is at least well regarding by other titans in the industry. Levy is hated (and not respected) by all.
Comment #8 Posted By: Anonymous 07/08/09
Anonymous
number 5 clearly has a vendetta against YL - writes the same sort of thing every time. Question to you 5: What did he do to you?
Comment #9 Posted By: Anonymous 07/08/09
Anonymous
8 - this is play money for him. family and other businesses are rolling in cash
Comment #10 Posted By: Anonymous 07/08/09
Anonymous
Doesn't everyone that Yair Levy does business with end up having a "vendetta" against him because he screws them over?
Comment #11 Posted By: Anonymous 07/08/09
Anonymous
no 12, just the same guy who writes the same thing everytime, as he did at #5.
Comment #12 Posted By: Anonymous 07/08/09
Anonymous
well at least the market rate tenants have stopped defaming everyone on this board
Comment #13 Posted By: Anonymous 07/08/09
Anonymous
This has to be just a little bit embarassing for Kent around the office. He sits 2 doors down from the Zeckendorf brothers, who completed the most successful residential development of all time with 15 CPW.
Comment #14 Posted By: Anonymous 07/08/09
Anonymous
At least Kent still has an office, though, right? Rumor is Yair is running his "business" using disposable cellphones and using Starbucks for office meetings because he defaulted on his lease and got evicted. No one will give YL a meeting, let alone lend him money he desparately needs to survive. I bet he eats lunch at Burger King, getting ready for his own BK!!!
Comment #15 Posted By: Anonymous 07/08/09
Anonymous
Actually, the Zeckendorf's didn't do as well on 15CPW as you think. The units were foolishly underpriced (resales made all the money) and they had HUGE cost overruns, so while they sold the units, they didn't make much money at all. And the Z Bros. only owned 1 or 2% of the deal - they don't have enough money to carry the deal on their own, so they had to bring in many, many partners who got a "Pref" and took all of the profits.
Comment #16 Posted By: Anonymous 07/08/09
Anonymous
15 CPW is the most successful residential development and the Zeckendorf Brothers made a fortune on the development. The project was completed on schedule and budget and the apartments sold for the highest prices in the history of Manhattan.
Comment #17 Posted By: Anonymous 07/08/09
Anonymous
#13 - it isn't defamation when it is true. Your boss Kent has plenty of people willing to call out his behavior. Pretty much anyone and everyone he does business with, whether they are tenants, purchasers, contractors, and the list goes on.
Comment #18 Posted By: Anonymous 07/08/09
Anonymous
#17, you forgot to post your name - is it Artie or Willy perhaps?
Comment #19 Posted By: Anonymous 07/08/09
Anonymous
Swig is a spoiled rich kid of moderate intellect. Not stupid, but certainly not a leader in this industry. I have heard him speak at probably 5 or 6 luncheons and events during the boom, and he sounded so unimpressive every time. He doesn't put together clever or interesting deals, just invested in the momentum of the Manhattan market over the last decade without executing particularly well. His family is quite displeased with how he has made such a negative name for himself. He won't go to jail but will be paying millions in legal fees and obligations on his guarantees, and will be writing off millions of equity that he invested in failed projects...good riddance, as other more talented people will take his place in the world of NY real estate.
Comment #20 Posted By: Anonymous 07/08/09
Anonymous
I am in now way his advocate or publicist #20, however the fact remains he invested in a lower Manhattan buildings in 2001/2 when everyone else was running the other way. He bought them at pre-bubble prices too.
Comment #21 Posted By: Anonymous 07/08/09
Anonymous
The Zeckendorf Brothers are very succesful and well liked by their peers, Swig is a failure. Its all about show and glitz. The purple thing is ridiculous, like Swig. His employees write these lies about his partners to enhance their BS, it time Bill, Steve hit the road like Paul.
Comment #22 Posted By: Anonymous 07/08/09
Anonymous
#22 doesn't sound like you know much inside info,Steve hit the road like paul? I think Swig has alot more success with his commercial projects, I wouldn't call him a failure
Comment #23 Posted By: Anonymous 07/08/09
Anonymous
The Zeckendorfs are well liked by their peers? Whose pipe are you smoking?
Comment #24 Posted By: Anonymous 07/08/09
Anonymous
Yair Levy has a 0% success ratio in his deals - literally, every deal he has ever touched has tanked. He's probably not long for solvency.
Comment #25 Posted By: Anonymous 07/08/09
Anonymous
#25 what about Fulton Street?
Comment #26 Posted By: Anonymous 07/09/09
Anonymous
Ha. Look at Yair's "holdings" - foreclosed, foreclosed, foreclosed, underwater, underwater, sold, underwater. What a champ! No wonder he is skipping town.
Comment #27 Posted By: Anonymous 07/09/09
Anonymous
#29 You are right! wow
Comment #28 Posted By: Anonymous 07/09/09
Anonymous
Where's the driveway???
Comment #29 Posted By: Anonymous 07/09/09
Anonymous
Yair is skipping town? To where?
Comment #30 Posted By: Anonymous 07/09/09
Anonymous
What happened in court?
Comment #31 Posted By: Anonymous 07/09/09
Anonymous
No receiver, looks like Swig won.
Comment #32 Posted By: Anonymous 07/09/09
Anonymous
not true...A judge wants Swig deposed, and Swig never wants to be deposed. This could be the beginning of a FRAUD investigation, if we are lucky. That is what a reciever would do.. look for some asset recovery, and audit everything....very interesting, but very bad for Swig. #32, are you Swig's mother?
Comment #33 Posted By: Anonymous 07/10/09
Anonymous
# 33 is yair son in law Danny. Other son in law is dumb
Comment #34 Posted By: Anonymous 07/15/09