Failed Sutton Place developer files for bankruptcy

Joseph Beninati, on the hook for $24 million, has $900 in his bank account

From left: a rendering of 3 Sutton Place, Joseph Beninati and Gamma Real Estate's Jonathan Kallikow
From left: a rendering of 3 Sutton Place, Joseph Beninati and Gamma Real Estate's Jonathan Kallikow

Joseph Beninati was once the face of an ambitious Manhattan development that would have put him on the map of high-stakes New York real estate.

But the greenhorn developer fizzled out as quickly as he arrived on the scene, and now his botched plans have placed him in financial ruin.

Beninati filed for personal bankruptcy in Texas this week, listing some $24 million in liabilities — mostly from the personal guarantee he owes from his unrealized sky-high luxury condo tower project on Sutton Place.

The voluntary petition Beninati filed in Texas’ Western District court Monday shows just how far removed his lifestyle is now from that of a flashy real estate developer he portrayed just a few years ago.

Beninati has surrendered a pair of luxury German automobiles he had been leasing — a Mercedes Benz and Audi — and listed few assets beyond the roughly $900 he holds in his checking account.

His most valuable personal holdings include a set of golf clubs, clothing and home items, a 25-year-old Tiffany watch and a Sig Sauer 357 pistol. Beninati listed assets of slightly more than $39,000, mostly from a $32,000 individual retirement account.

Fillings show Beninati earns $1,500 a month doing acquisitions for a company named Other Side Industrial.

He could not be reached for comment.

The Bronx-born former developer listed his largest creditor as an entity controlled by Gamma Real Estate, which is holding Beninati liable for a $24 million guarantee tied to the loan on his disastrous 3 Sutton Place project. A representative for Gamma was not immediately available to comment.

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His second-largest creditor is the law firm Meister, Seelig & Fein, which represented Beninati in court with Gamma. An attorney at the law firm, Stephen Meister, said his practice got a court judgment ordering Beninati to pay roughly $58,000 in legal fees.

“As far as I know, we haven’t yet been paid,” he said.

A meeting of creditors is scheduled for February 28 in Austin.

This is not Beninati’s first bankruptcy case. In 2016 he threw the limited liability company that owned his Sutton Place development site into bankruptcy. The same year, an LLC that he and his wife were associated with filed for bankruptcy in Massachusetts.

Beninati owned a home in Connecticut that he appears to have given up to a lender. The home sold at auction in late 2018 for $6.53 million.

Beninati jumped onto the scene in 2013 when he formed Bauhouse Group and started assembling sites on the East Side for a planned 113-unit, 950-foot-tall luxury condo tower at 3 Sutton Place. He obtained a hugely expensive loan of more than $147 million from Gamma Real Estate for the project and spent most of it without building his tower.

Rejecting opportunities to partner with more experienced builders, Beninati bought three East 58th Street parcels in 2015, purchased air rights, bought out rent-regulated tenants and paid architects and other pre-development costs. But he defaulted on the loan before he could bring the project to fruition. He lost control of the site in a 2016 foreclosure auction to Gamma, which is currently erecting a tower there.

Beninati got further with a 12-unit condo project at 515 West 29th Street, but had to exit that development as well.

Chris Jones, one of Beninati’s Bauhouse Group partners, left the country after a New York court ordered him and two other principals to pay Gamma more than $24 million.