Brooklyn developer Yehuda Backer is facing a $50 million lawsuit from investor Joe Tabak for allegedly backing out of a deal to sell him two lucrative development sites in Williamsburg, and then selling them to a group led by the Cayre family.
In March, Michael Cayre’s Midtown Equities teamed up with Bobby Cayre’s Aurora Capital and investor Alex Adjmi to acquire the site at 242 Bedford Avenue. There, they plan to develop a $40 million, 150,000-square-foot residential and retail site, featuring luxury rental apartments, a Whole Foods and a New York Sports Club.
Tabak, in a July 10 suit filed in New York State Supreme Court, claims that Backer and his wife, Ruthe, breached an agreement by selling the sites without consulting his lawyers or at least putting the sites up for auction. Tabak, who filed suit under his Princeton Bedford affiliate company, claims his firm lost $1.3 million after Backer threw the site into bankruptcy to protect it from lenders.
According to the suit, Backer, the managing member of S&Y Enterprises and Sky Lofts, entered into a deal in 2010 with Michael Cayre and Adjmi to buy the properties for $20 million, under a joint venture called CAB Bedford. S&Y defaulted on a loan with lender Capitol One and agreed to give up the property under a deed-in-lieu of foreclosure, but filed bankruptcy in U.S. Bankruptcy Court in November 2010 to block that from going through.
A deal was reached in court to reduce the price to $16.5 million. However, Capital One and Banco Popular filed objections to deals that were proposed in bankruptcy court, claiming they were owed $2.4 million and $386,000, respectively, and a new agreement was reached in May 2011 to sell the sites to Tabak for $21 million, with Backer’ firm getting a 35 percent stake in the property under a new joint venture. However, the Cayre venture, CAB Bedford, filed objections to the new proposal.
The suit claims that Backer entered secret negotiations with the Cayre joint venture group to sell the sites to them instead, and reached a deal to sell them the properties, a move that counters a new plan that was submitted to The Bankruptcy Court.
Backer declined comment, according to company officials. Fried Frank attorney Janice MacAvoy, representing Tabak’s firm, was not available for comment. Tabak and Midtown Equities officials did not return calls for comment.