Schrager files suit against Rosen, Fuchs over Gramercy Park Hotel loan

TRD New York /
Jan.January 11, 2012 06:30 PM

The bad blood simmering at the Gramercy Park Hotel is apparently heating up again, as Ian Schrager’s firm has filed a lawsuit against former investment partners Aby Rosen and Michael Fuchs alleging they failed to pay him back on a relatively small $1.15 million loan.

The suit, filed in New York State Supreme Court, alleges that Rosen and Fuchs, who are partners in Manhattan-based RFR Realty and owned 50 percent of the hotel in a high-profile partnership with Schrager, borrowed the money in December 2010 and was not repaid by the due date of Dec. 20 of last year.

“Rosen and Fuchs do not have any legal or factual defenses, excuses or justification for the violation of their obligations under the promissory note,” Schrager stated in a Jan. 4 affidavit, filed today in Manhattan Supreme Court.

Schrager is asking for a judgment against Rosen and Fuchs, as the suit states there are no disputes at issue under the loan documents.

As The Real Deal previously reported, Schrager, chairman and CEO of Ian Schrager Company, sold his stake in the 185-room hotel at 2 Lexington Avenue in December 2010 after a long dispute with Rosen and Fuchs, with sources saying the deal went for $20 million. The partners sank more than $200 million into the hotel pr4ior to the breakup, but Rosen eventually agreed to buy out Schrager’s stake in the property.

Rosen and Fuchs have since gone through a year of turbulence with his their real estate business, including a high-profile spat with long time investor Harry Lis, over whether the partners were properly repaying investors in their real estate business or taking out the profits and reinvesting in separate business entities. Rosen had accused Lis of failing to provide investment funds when capital calls were made.

Rosen and Lis settled most of their issues in July, with Lis receiving most of the funds he was owed.

Rosen and Fuchs also struggled to sell a 49 percent stake in the Seagrams building, amid a separate dispute with investor Peter Brandt.

In June, RFR was able to pull off a surprise $275 million acquisition of the Paramount Hotel, a 597-room property at 235 West 46th Street, from Walton Street Capital and Highgate Holdings. The property had previously been owned by Schrager as well.

Y. David Scharf, Schrager’s attorney, declined to comment. RFR officials were not immediately available for comment.

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