The Bel-Air mansion called The One fetched $141 million at an auction that sought $295 million. Now creditors are fighting for the crumbs.
The March sale of the 105,000-square-foot property to L.A. fashion mogul Richard Saghian meant that some major lenders of the bankrupt Bel-Air project could be left out of the money, given claims totaling more than $250 million, the Los Angeles Times reported.
The 21-bedroom, 49-bath mansion at 944 Airole Way was the most expensive property ever sold at a U.S. home auction. But now one lender has filed a lawsuit claiming unfair business practices against another, alleging someone forged a document putting it second in line to be repaid.
The lawsuit was filed last month in U.S. Bankruptcy Court by the investment firm of Julien Remillard, a former longtime associate of developer Nile Niami.
The home’s bankrupt limited liability company, Crestlloyd, had sought court permission to pay nearly $104 million out of the $138 million the estate received from the auction to a different lender, Los Angeles billionaire Don Hankey.
Hankey Capital, the largest creditor of the estate, made three loans totaling more than $100 million to Crestlloyd starting in 2018. At issue is repayment of the first loan, together with related interest and fees.
Hankey knows something about credit, having made his money in auto lending and real estate. Forbes once called him the “king of subprime car loans.”
The Bel-Air estate has already paid priority claims such as taxes. With such a large payout going to Hankey, there would be little left for other creditors, including Remillard’s Inferno Investment, which claims it is owed $20.9 million.
Inferno said it and related entities loaned $18 million for the acquisition of the property in 2013, and to break ground on what was then going to be a 40,000-square-foot house.
Though Inferno lent before Hankey Capital, the lawsuit acknowledges Inferno signed an agreement in 2016 allowing Crestlloyd to repay later loans needed to finish the mansion even before Inferno was repaid for its investment. The deal also required Crestlloyd to get approval from Remillard for certain loans that would become senior to Inferno’s debt, the lawsuit said.
It alleges that never happened. Instead, the lawsuit claims that Remillard’s signature was forged on an October 2018 subordination agreement allowing Hankey to be paid first.
The lawsuit accuses Hankey Capital of numerous wrongs, including unfair business practices, failing to monitor its loans and putting itself in a position to foreclose on the property.
Inferno is asking a Bankruptcy Court judge to move it to the front of the line for repayment among the estate’s big secured creditors. It also seeks to have the 2016 agreement declared null and void, alleging Crestlloyd padded invoices from contractors and suppliers working on The One, diverting money to Niami and his former wife, Yvonne.
Hankey said he viewed the lawsuit as possibly “posturing just to try to get something back.”
Hamid Rafatjoo, Niami’s attorney, scoffed at the lawsuit, which doesn’t name his client as a defendant, as a ploy by the developer’s former investor to muddy the waters. David Golubchik, the attorney for Crestlloyd, a defendant in the lawsuit, said the suit has halted any more payments to Hankey and will slow the winding down of the bankrupt estate.
[Los Angeles Times] – Dana Bartholomew
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