Korean bank suit threatens 70 Pine sale

TRD New York /
Dec.December 22, 2011 06:30 PM
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From left: Sciame Development CEO Robert Sciame, 72 Wall Street (credit: PropertyShark) and 70 Pine Street

Korea’s Kumho Investment Bank is facing litigation from a former developer of 70 Pine Street, in a battle that could threaten the scheduled sale of the building tomorrow.

Sciame Development filed a $7.7 million suit in State Supreme Court Dec. 19, alleging breach of contract after KIB hired it to take over as developer of the Pine Street project, at the former AIG headquarters, from Youngwoo & Associates, but failed to pay the company millions of dollars after deciding in June to sell the property to a partnership that included Ronnie Bruckner and Metro Loft Management, which is led by Nathan Berman.

Sciame asked for a temporary restraining order that would withhold $7.7 million in proceeds from the sale, scheduled to close tomorrow.

“The KIB defendants stand to reap $205 million from the sale — money that if the KIB defendants are not enjoined from transferring — will promptly be removed from the United States and disseminated overseas, out of the court’s jurisdiction,” lawyers for Sciame wrote in a court filing.

Judge Barbara Kapnick denied most of the request, but did approve a limited restraining order on $1.3 million. Sciame’s lawyers immediately filed an appeal yesterday, to have a higher court overturn that decision and impose a restraining order on the full $7.7 million.

Lawyers for KIB disputed the amount owed and said they plan to fight the allegations.

“Sahn Eagle denies that Sciame Development is owed the amounts requested and it intends to defend itself in court,” said Matthew MacLean, a partner at the Washington-based firm of Pillsbury Winthrop, which is representing the defendants.

It remains unclear whether the sale is still scheduled to close tomorrow, as officials declined to comment on the transaction.

“I can’t comment on this at the moment,” Berman said.

The two buildings, 70 Pine and a former AIG training center at 72 Wall Street, have been the subject of much controversy and litigation since they were originally acquired by Kumho for $150 million, which partnered with Youngwoo to develop the property into high-end condominiums.

After the original acquisition, Youngwoo announced plans to convert the property into condos at more than $2,000 a square foot, but the residential market in Lower Manhattan was very weak due to the economic downturn. 

Youngwoo filed suit in August 2011 alleging that KIB schemed with a former Youngwoo employee to push the developer out of the project, which also involved 72 Wall Street, and then agreed to sell 70 Pine in an off-market deal to Bruckner and Berman. Soufun Holdings, a Beijing, China-based real estate firm, agreed to buy 72 Wall in December 2010 for $46 million.

“They basically conspired with an employee to squeeze us out of the project,” said attorney Larry Hutcher, a partner at Davidoff, Malito & Hutcher, which represents Youngwoo.

A State Supreme Court judge ordered that case to arbitration after months of legal wrangling and $5 million has been placed into escrow. Lawyers for Youngwoo said they offered to buy out the two properties, because KIB had promised investors that it would sell the properties for at least $280 million.

Sciami Development officials were not immediately available for comment and nor were Youngwoo officials.


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