Vanke files $680K suit in condo dispute with RFR

Latest action alleges Aby Rosen, Michael Fuchs failed to fund capital calls for Midtown project

New York /
Apr.April 05, 2021 04:32 PM
From left: Vanke US managing director Kai-yan Lee, 100 East 53rd Street and RFR’s Aby Rosen (Photos via Foster + Partners and Getty)

From left: Vanke US managing director Kai-yan Lee, 100 East 53rd Street and RFR’s Aby Rosen (Photos via Foster + Partners and Getty)

Vanke US has opened up a new front in its ongoing battle with RFR Holding over control of a Midtown condo tower project that defaulted on its construction loan last year.

The company, which is the U.S. subsidiary of one of China’s largest real estate developers, is seeking a judgment of nearly $680,000 against RFR co-founders Aby Rosen and Michael Fuchs according to a new lawsuit filed in New York County Supreme Court.

That sum stems from RFR’s failure to meet capital calls beginning in December 2019, for which Rosen and Fuchs “irrevocably, absolutely, and unconditionally guaranteed the payment and performance,” according to an affidavit from Vanke US managing director Kai-yan Lee.

According to the joint venture agreement between Vanke and RFR, Vanke was required to fund 93 percent of each capital call while RFR would fund the remaining 7 percent — reflecting the partners’ respective stakes in the JV behind the 63-story, 94-unit development at 100 East 53rd Street.

While Vanke has continued to fund its share, RFR has refused to do so — with unpaid contributions now totaling more than $590,000, plus over $88,000 in accrued interest, according to the suit. Most of the amount owed comes from the December 2019 capital call, for which RFR was supposed to pay $408,800 per Vanke’s calculations.

Representatives for Vanke and RFR did not respond to requests for comment.

The dispute over the project first entered the public eye in October, when Rosen’s firm filed a lawsuit accusing Vanke of making a “backdoor deal” with Industrial and Commercial Bank of China that gave it an interest in both sides of the $360 million construction loan that defaulted in May.

In response, Vanke claimed that RFR was intentionally sabotaging the project in order to extract an “exorbitant buyout” of its minority stake — a strategy that had already begun before the pandemic, with the refusal to fund the December 2019 capital call.

In filings in the ongoing lawsuit, RFR’s lawyers acknowledge that the company has not made any capital contributions since December 2019, after informing Vanke that “it made no economic sense to contribute such funds without a plan to address the upcoming [May 2020] maturity.” But they note that “the failure to fund a capital call cannot be a ‘For Cause’ event” that would allow Vanke to remove RFR from the partnership, according to the LLC agreement.

Vanke’s lawyers accept that the capital call issue alone is not enough to remove RFR from the project, but argue that it reflects a broader pattern of bad behavior.

“RFR’s abject failure to provide much needed capital to the company in a time of distress (to avoid default) demonstrates that RFR does not have the company’s interests in mind and is committed to starving the project of needed capital in order to force a buyout,” they wrote in a March memorandum.

Both RFR and Vanke have issued capital calls for additional funds to cover expenses at the project over the past year, according to court filings.





    Related Articles

    arrow_forward_ios
    From left: Starwood Capital’s Barry Sternlicht and Veracity Development’s Edmond Li along with 111 Mercer Street (Getty, Google Maps, Veracity Development)
    Sternlicht’s LNR aims to foreclose on Veracity’s Soho condo
    Sternlicht’s LNR aims to foreclose on Veracity’s Soho condo
    From left: Thor Equities' Joseph Sitt, Lightstone's David Lichtenstein and Mitchell Hochberg with Skybridge Towers (Skybridge Towers, Getty)
    About case: Joe Sitt drops suit against Lightstone execs
    About case: Joe Sitt drops suit against Lightstone execs
    Hackensack mayor John Labrosse, 436 Main Street (Loopnet, Getty, City of Hackensack)
    Hackensack Sears redevelopment is back on
    Hackensack Sears redevelopment is back on
    “If they want to try to suck our blood, make my day:” John Cats takes on venerable store
    “If they want to try to suck our blood, make my day:” John Cats takes on venerable store
    “If they want to try to suck our blood, make my day:” John Cats takes on venerable store
    DW Partners David Warren and 427 Marcy Avenue (Getty, DW Partners, Google Maps)
    Bizarre bankruptcy stops Brooklyn condo project foreclosure
    Bizarre bankruptcy stops Brooklyn condo project foreclosure
    Salim Assa with 15 West 55th Street
    Troubled Midtown rental saga headed for a foreclosure finale
    Troubled Midtown rental saga headed for a foreclosure finale
    Alex and Yanina Sapir, the Venetian Islands and the motion (Getty, Instagram/yanina_fu_sapir, Wikipedia/Marc Averette, Circuit Court for Miami-Dade County)
    Alex Sapir secretly attempted to sell Miami Beach home amid divorce, wife alleges
    Alex Sapir secretly attempted to sell Miami Beach home amid divorce, wife alleges
    From left: Top Agent Network CEO David Faudman, NAR president Kenny Parcell, and Attorney General Merrick Garland (Getty, Top Agent Network)
    Justice Department wants say in pocket listings case against NAR
    Justice Department wants say in pocket listings case against NAR
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...