UPDATED, 11:20 a.m., Nov. 1: In the legal tug-of-war over Toby Moskovits’ stalled Bronx apartment project, a state judge pulled in the direction of the lender. But Moskovits and her partner are digging in.
On Thursday, Judge Lisa Beckerman allowed Be-Aviv, the Mott Haven project’s lender, to terminate the development’s Bank of America credit card and any associated line of credit.
Beckerman also granted Lee Buchwald, the bankruptcy manager appointed by Be-Aviv, access to the property, ordering Moskovits’ Heritage Equity Partners to hand over the alarm codes so Buchwald can change the locks.
Moskovits and partner Michael Lichtenstein are appealing.
“We believe the lender has perverted the bankruptcy process in violation of New York state and federal laws,” said Moskovits. “We intend to pay off this loan in the coming weeks and launch the full construction of this project, while continuing to pursue damages against a lender who has blatantly violated the law.”
On Oct. 11, Heritage demanded a payoff letter for the acquisition loan, which would have allowed it to pay the remainder of the debt in full and move ahead with construction, despite the ownership entity’s bankruptcy. Heritage also moved to appoint a new, independent trustee to oversee the bankruptcy, alleging that Buchwald was acting as both lender and manager of the borrower, as he had been appointed by Be-Aviv.
On Tuesday, Be-Aviv asked the court to hire Rosewood Realty Group to sell the building, leaving open the possibility that the lender could make a credit bid for the property.
The order is the latest turn in a dispute over the financing for Heritage’s proposed 105-unit project. The spat began in March when Be-Aviv declared its $8 million loan to Heritage in default. For its part, Heritage says Be-Aviv failed to deliver on a promised second phase of funding, $52 million, for a separate Heritage project, 875 Fourth Avenue in Brooklyn. Moskovits sued Be-Aviv in March, alleging it failed to provide all the money it promised.
In the suit, Moskovits says that the fund, led by Israeli real estate scion Ben Harlev, had agreed to a three-part funding plan that would have provided a total of $94 million. She claimed the first phase, an $8 million land loan for the Bronx project, was a test-run to ensure the new lender could keep up its end of the bargain. When it didn’t deliver the second round of funding, according to Moskovits, she stopped repaying the first part, resulting in the default declaration.
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In an unusual move this July, Be-Aviv filed for bankruptcy on behalf of Moskovits’ development LLC and demanded that she name Be-Aviv owner of the shell company.
An attorney for Be-Aviv did not respond to a request for comment.
Correction: A previous version of the story misstated the size of the defaulted loan.