Hold the housewarming on The One
Saghian rejected on request for approval of topping bid, another court hearing set for this week
It looks as though fashion mogul Richard Saghian should hold off on the housewarming invitations for The One.
A bankruptcy judge on Friday extended the drama surrounding Saghian’s topping $126 million bid for spec developer Nile Niami’s megamansion in Bel-Air. U.S. Bankruptcy Judge Deborah J. Saltzman pegged the end of this week for a hearing that will consider whether the recent sale at auction will become final, with various claims by lawyers involved in the case outstanding until at least then.
It’s the latest wrinkle on the deal, which has already set off buzz about behind-closed-doors bickering over how to count the price–the buyer also had to pay a $15 million fee to the auction house, which boosted the total outlay of $141 million. The unusual circumstance–the sale was the priciest of any residential property at auction in U.S. history–has touched guessing games on who among a cast of five developers involved will get what for commissions.
The 3.8 acre hilltop property–once billed as a $500 million showpiece–includes amenities such as a 64-foot indoor pool, a night club, a salon, a 10,000-square-foot skydeck, a cigar lounge and a wellness center. It went to auction on March 3, when Saghian came out on top with an 11th-hour bid.
A March 11 hearing conducted online by Saltzman entertained rejected a motion to approve the winning bid by Saghian, founder of the Fashion Nova brand and impresario of celebrity influencers. The request came over worries by Saghian, whose offer comes to less than half the $295 million asking price attached to the property before the auction, that auction procedures and motions filed by the debtor after the sale announcement gave unfair wiggle room to entertain last-minute bids for the property, said Sam Newman, Saghian’s lawyer.
“This process my client has participated in and relied upon is being turned into a free-for-all with no structure,” Newman argued.
The judge found the auction sales’ language had been clear, and that any procedural objections to the auction could be raised during a hearing for the sale scheduled March 18.
It seems other objections could come for the other side at the upcoming hearing.
Other circumstances in the case seemed murky, said Hamid Rafatjoo, a lawyer for a stakeholder in the property, which entered bankruptcy under Crestlloyd LLC.
He alleged the buyer did not complete the paperwork work to buy the house, and that the buyer was lowballing the property’s price tag.
“This motion is simply an attempt by the buyer to overreach and obtain a windfall on this property,” Rafatjoo said. “There’s no doubt that property is worth materially more than the current bid that is on the table.”
The buyer’s attorney, Newman, answered that Saghian completed documents “that comply with the debtor’s requirements.”
Saghian should expect more turbulence. During the hearing, Mark Shinderman, a lawyer for another debtor stakeholder, told the judge that his client was considering filing an objection to the sale, in part because the geopolitical situation, such as the war in Ukraine, might have scared off buyers who might pay a higher price.
The judge’s decision to extend her consideration to the March 18 hearing apparently offers the attorneys a chance to explain how an action process can be “low-balled” and why the deal should be held in abeyance while the Russia-Ukraine war proceeds, and whether there’s any more steam to the complaint on last-minute bidders.
Saltzman also said she would allow Saghian’s legal team a chance to bring claims of an unfair bidding process that prompted the request to get the court’s approval of the auction sale. Saghian’s legal team cited a move by the other side on March 8, when the “Debtor filed a noticed motion to approve the sale of the property to Buyer or another bidder …”