Delisted from the Tel Aviv Stock Exchange and facing foreclosure of its prized properties, Yoel Goldman’s All Year Management has had a rough couple of months since missing a bond payment and delaying financial disclosures at the end of November.
Earlier in the pandemic, the Brooklyn development firm had pinned its hopes on a $300 million portfolio sale and a $650 million refinancing of the Denizen Bushwick luxury rental project, but those both fell through late last year — and the portfolio buyer, David Werner, is now suing to get his $15 million deposit back.
All Year’s recently appointed chief restructuring officer, Joel Biran, pointed to the ongoing economic crisis as a reason for the company’s woes.
“The coronavirus has hit New York very hard and disproportionately to the rest of the U.S.,” Biran told Israeli investors in a recent online meeting, according to business publication Calcalist.
“There are few deals happening, and those that are getting done are at rock-bottom prices,” he said, adding that he was “trying to be optimistic” that market conditions would also make lenders less eager to foreclose on the firm’s properties.
Other investors, however, were raising concerns about All Year’s finances even before the pandemic.
“We saw this happening from a mile away,” Ardon Wiener of Chestnut Holdings said in a statement. The Bronx landlord is affiliated with Israeli candy maker Toot Food, which began shorting All Year’s bonds in early 2020 and sued All Year in March over alleged improprieties, raising questions about its asset valuations and liquidity.
“At this point we wish the highest recovery possible for investors and believe they will recover the most dollars by appointing someone trustworthy to manage All Year’s potential liquidation,” said Wiener.
On top of mounting financial obligations and the Werner suit, All Year is facing new legal headaches from his long-running battle with fellow Brooklyn real estate players Toby Moskovits, Michael Lichtenstein and Moshe Dov Schweid — a dispute that was ostensibly put to rest in 2019.
Goldman helped launch Moskovits’ development career back in 2011, when he invested $2.5 million for a 35.25 percent share in her first project, a 41-unit rental-and-commercial complex at 227 Grand Street.
Moskovits’ stake was only 5 percent, and her partner at Heritage Equity Partners, Michael Lichtenstein, held 26.75 percent. Rabbi and real estate investor Schweid held 33 percent, making Goldman the largest single stakeholder.
In 2015, after a falling-out, Moskovits and Goldman reached a settlement that saw them part ways at several properties, including the now-struggling Williamsburg Hotel. But they retained their respective stakes in 227 Grand Street, with All Year continuing to manage the property.
But a year later, All Year sued Moskovits and Lichtenstein, alleging that they were attempting to improperly oust it from management. Goldman claimed that the move was motivated by a $7 million loan he made to Moskovits as part of the settlement, which she was unable to repay.
According to the suit, Moskovits’ default entitled Goldman to her and Lichtenstein’s combined 31.75 percent stake in the building — which would make him the majority owner, with sole control.
Moskovits, Liechtenstein and Schweid fired back with a suit of their own in 2017, accusing Goldman of “ongoing theft of Company funds, misappropriation of substantial assets” and “wrongful trespass” on the property, because Goldman was continuing to act as the building’s manager and collecting rent from tenants.
In an affidavit in response, a representative for All Year dismissed complaints about the building’s management, and went on to blame Moskovits et al. for accidentally causing a termite problem in their own office by doing renovations with infested wood and for engaging in “blatant self-dealing” by occupying office space in the building without paying rent.
The allegations then took a nastier turn, as Moskovits’ side accused an All Year employee of being involved in an “illegal gas hook-up scheme,” while All Year claimed that Moskovits and Lichtenstein “opened a new management company in order to conceal the fact that they have in the past managed property in Philadelphia which resulted in the death of two firefighters.”
As both sides continued to duke it out in court, the clock was also ticking on a $19 million senior loan on the property that Santander Bank (then Sovereign Bank) had made in 2012.
In late 2019, with maturity looming, the shell companies Lichtenstein and Schweid used to hold their respective stakes in 227 Grand filed for bankruptcy.
At the time, Lichtenstein told TRD that he intended to withdraw the Chapter 11 application shortly, and that he, Moskovits and Schweid had reached “an amicable out-of-court agreement with Yoel Goldman that settles all litigation related to a dispute over the property at 227 Grand.”
Lichtenstein et al. had hoped to secure refinancing for the building and exit bankruptcy quickly, court documents show. But the pandemic complicated matters, and the bankruptcy proceedings are still ongoing.
In October, Goldman filed another lawsuit against Lichtenstein and Schweid, accusing them of a failed attempt to “squeeze out” his stake in the property through a merger without his approval.
“The members that purportedly authorized the merger are subject to a pending bankruptcy proceeding and lacked the authority to consent,” the summons says, seeking at least $15 million in damages for fraud, breach of contract and other causes of action.
The parties exchanged further allegations in bankruptcy court, with Lichtenstein and Schweid accusing Goldman of refusing to sign extension documents because he was “secretly colluding with others” to put the mortgage into default, “with the intention of then trying to buy the note from the lender or partnering with someone to do so.”
All Year declined to comment for this story. Representatives for Moskovits, Lichtenstein and Schweid did not respond to requests for comment.
Like All Year, Heritage Equity has also found itself in dire financial straits, as TRD detailed last year. A notable difference, though, is that All Year’s struggles will have an impact on a wide range of public investors, as the company has four outstanding (albeit currently suspended) bond series on the Tel Aviv Stock Exchange.
The face value of the bonds is $705 million (2.29 billion shekels), but their actual market value by the time trading was suspended in early January amounted to just $382 million (1.24 billion shekels). And it appears that the worst is yet to come.
On Feb. 1, All Year disclosed that the ground lease tenant at the William Vale complex — whose hotel portion has been closed due to the pandemic — would miss its biannual $7.5 million rent payment. Both the tenant and landlord entities at the William Vale are partially owned by Goldman, and the property is collateral for All Year’s Series C bonds.
On Feb. 5, mezzanine lender Mack Real Estate was set to conduct a UCC foreclosure sale of its interest in phase two of the Denizen Bushwick — but All Year filed a lawsuit the day before in an effort to block the sale, and disclosed to the Tel Aviv Stock Exchange that the sale had now been postponed to Feb. 23. Phase one of the project serves as the collateral for All Year’s Series E bonds.
According to an analysis from Calcalist, the sale price of Denizen phase two is likely to be less than the value of the debt. A similar outcome for Denizen phase one and the William Vale would be bad news for secured bondholders — who would receive any surplus — and even worse news for holders of the unsecured Series B and D bonds.
In early January, an anonymous LLC, Paragraph Partners, put forward a proposal to buy up All Year’s bonds, but this was rejected by bondholders, according to Calcalist. A new proposal is reportedly being negotiated in which the buyers will no longer be anonymous. Separately, Israeli outlet TheMarker reported that New York-based investment firm Churchill Real Estate, which specializes in distressed real estate investing, has also made an offer.
Meanwhile, other disputes involving All Year continue to emerge in court.
In December and January, Goldman and developer Meyer Chetrit traded lawsuits over several million dollars Goldman allegedly owes in connection with scrapped deals from 2019.
In February, an entity named Madcap Funding LLC sued Goldman over a $5 million confession of judgment the developer signed in September in connection with more than 100 properties.
Goldman responded with a lawsuit alleging that recently pardoned drug smuggler Jonathan Braun is behind Madcap and the judgement is invalid.
As details regarding All Year’s complicated web of business interests and litigation continue to emerge, it appears that Goldman may be the only person who has a full grasp of the situation.
“I suppose a lot of people have ‘a full stomach’ from what he did. I’m not concerned with that,” Biran told investors. “In his head, Goldman has all the information we could ask for.”