UPDATED July 18, 2022, 1:20 p.m.: Just months ago, Zelig Weiss was ready to take the helm of the William Vale hotel. All Year Holdings, the firm owned but no longer controlled by Yoel Goldman, his partner in the posh Brooklyn property, appeared set to accept Weiss’ bid for its stake.
Then the winds shifted, and in late May, All Year Holdings reached a deal to sell to health care investor Avi Philipson.
Now Weiss is fighting back. In a new complaint in bankruptcy court, Weiss alleges the deal with the Philipson group is illegal. Weiss says his 2016 agreement with Goldman to develop the 183-key hotel was supposed to ensure they remain partners, but a sale to Philipson would create a partnership with a stranger.
Worse, it would put Philipson or his partners in the captain’s seat on key decisions, according to Weiss’ complaint. He is seeking a court injunction to stop the sale.
Weiss’ argument centers around a transfer of a 50 percent stake of a company co-owned by Weiss and All Year. That company, Wythe Berry Member LLC, controls the William Vale property. Despite the evenly split ownership, All Year claims to be the LLC’s controlling member. If the deal with Philipson goes through, that controlling interest would be transferred as well.
But Weiss claims any transfer would violate the 2016 deal he had with Goldman and would require approval from Weiss along with All Year.
“All Year is attempting to use this transaction structure to bypass the transfer restrictions” in the agreement, Weiss’ lawyers argue.
That’s not his only gripe. Weiss claims he should be in control of the property.
When All Year filed for bankruptcy last year, it allegedly divested its membership interest in another shell company that held a 50 percent stake in Wythe Berry Member. Weiss is asking the court to declare that he is the managing member of Wythe Berry and thus control decision-making.
All Year filed an objection to Weiss’s complaint late Friday, stating that “Weiss’s only connection to the Chapter 11 Case is that he is a jilted and unsuccessful bidder with respect to the William Vale hotel.”
“These allegations are flatly wrong and will not long detain the court,” All Year’s lawyers predicted in their objection.
All Year said under its plan, there would be no transfer of interest within Wythe Berry Member. Instead, the Philipson-led group would control 100 percent of new equity in a reorganized parent company, which would control all interests in Wythe Berry.
The suit is the latest in a months-long drama surrounding the William Vale, the hip hotel that Weiss and Goldman, two up-and-coming Hasidic developers, built in 2016.
The spaceship-looking hotel became a status symbol of Williamsburg’s progression from an edgy artist haven to a trustafarian playground. Rooms at the William Vale commanded average rents of around $400 a night.
In 2017, Goldman used the hotel as collateral to raise money on the Israeli bond market to refinance debt. But he ran into trouble with his bondholders and missed payments, while his partnership with Weiss dissolved in a morass of distrust.
“I can’t be your partner like this,” Goldman texted Weiss in 2019, according to an exhibit in a lawsuit, “not to be able to know what’s the balance in the accounts.”
Foreclosures and lawsuits mounted for Goldman’s company and restructuring officers seized control of it in late 2020.
Six months later, All Year sued Weiss, who runs the hotel, alleging he diverted money from the establishment despite accepting $7 million in PPP money.
In October, things got even weirder. Just as All Year appeared to reach a deal with Monarch Alternative Capital and Richard Wagman’s Madison Capital to sell the hotel’s equity and debt for $156 million, Weiss jumped back into the bidding with his own offer.
All Year’s bondholders accepted Monarch and Madison’s bid, but the sale later collapsed.
Weiss, although facing allegations that he diverted money from the hotel, became the only bidder for it. Then came All Year’s surprise deal with Philipson’s group. Now, Weiss is telling the court his bid should carry the day, based on an agreement with Goldman that fell apart.
This article has been updated with a response from All Year Holdings.