Foreclosure on Phil Falcone’s homes can move forward

Judge denied temporary restraining order against UCC auction

New York /
Apr.April 09, 2021 09:25 PM
Philip Falcone and his homes at 142 Crestview Lane in Sagaponack and  22 East 67th Street (Getty, Corcoran, Google Maps)

Philip Falcone and his homes at 142 Crestview Lane in Sagaponack and  22 East 67th Street (Getty, Corcoran, Google Maps)

Philip Falcone is at the end of the road in a battle to sell two of his pricey homes his way.

A New York State Supreme Court judge dismissed the embattled financier’s request for a temporary restraining order to block Melody Capital’s UCC foreclosure on his Upper East Side townhouse and Hamptons mansion, according to a ruling filed Friday. Now, the auction can move forward as scheduled on April 13.

Falcone, who founded the hedge fund Harbinger Capital, submitted an affidavit earlier this week in an attempt to stop the sale. He argued he would “suffer irreparable harm,” both in terms of his finances and because he and his family still “need to find a place to live.”

In his affidavit, the hedge funder argued that by auctioning off his homes through commercial brokers, the properties would sell for less than they would on the open market if his long-standing residential brokers handled the deals.

Falcone said that, contrary to Melody’s claims that he’s been obstructing the sales process, he’s been working with broker Adam Modlin and an unnamed broker in the Hamptons to find a buyer for both properties and secure a new home to move into, according to court papers.

“I have been very active in my communication with Modlin and have been as open and as flexible as can be with showing the residences, even while my children are schooled remotely at home,” Falcone wrote. “I am prepared to sell with the caveat that my family and I have a place to go.”

Appraiser Jonathan Miller also submitted an affidavit on April 8, stating that “property auctions attract investors rather than owner-occupant purchasers. Therefore, the [townhome] would sell for less than its reasonable market value.”

In 2018, Falcone’s five-story townhouse at 22 East 67th Street was listed for $39 million. It came back on the market in August 2020 asking $27.5 million with the Modlin Group, according to a listing on StreetEasy. His 14,000-square-foot mansion at 142 Crestview Lane in Sagaponack is currently on the market asking $27.9 million with the Corcoran Group’s Gary DePersia.

Falcone made Forbes’ billionaires list in 2014 with an estimated net worth of $1 billion, but hasn’t since.  In 2013, he reached a settlement with the U.S. Securities and Exchange Commissions for allegedly borrowing money from his hedge fund to pay his personal taxes.

In March 2020, a New York judge froze Falcone’s assets along with his company’s after he failed to pay millions in debt to a law firm that represented him in the case, the Financial Times reported.

In February, Melody Capital, the mezzanine lender on two of Falcone’s homes, had scheduled the UCC foreclosure auction for an equity stake in the properties, as The Real Deal previously reported. A $74 million balance remains on the loans.

Falcone previously told TRD that he believes Melody initiated the foreclosure in an attempt to thwart a motion he filed seeking to void the loans. An attorney for Melody did not immediately respond to request for comment.

When reached for comment on Friday night, Falcone expressed excitement about future ventures. In an email, he said he was “excited about the FCC approving my purchase of the Los Angeles TV station today.” Falcone is the chief executive of a new firm called Sovryn Holdings, which acquired two low-power TV stations in LA in February and another station in Houston in March. His previous foray into broadcast media via HC2 Holdings ended last year when he was ousted after an activist investor’s campaign.

Sovryn also recently acquired a 59 percent stake in Madison Technologies Inc., a publicly traded company that acquires and develops a variety of businesses, notably bullet proof vests, company filings show. At $0.45 per share, Sovryn’s stake was worth more than $1 billion on Friday.

Newmark’s Dustin Stolly, Jordan Roeschlaub and Dan Fromm are marketing Falcone’s homes for sale. They declined to comment.





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