Cheskie Weisz’s CW Realty has managed to hold a creditor at bay at its Williamsburg residential development Kent House, narrowly escaping two foreclosure attempts.
The Brooklyn-based developer had been faced with a UCC foreclosure auction scheduled for 10 a.m. today for its equity interest in the luxury mixed-use project, at 187 Kent Avenue, which has 96 apartments and 31,000 square feet of retail.
Invictus Real Estate Partners’ Eric Scheffler (LinkedIn)
An entity called Invictus 187 Mezz initiated the process, asserting that CW Realty defaulted on a $10 million mezzanine loan. The entity was created when Invictus Real Estate Partners took over the loan, along with a $78 million senior mortgage, from Prophet Mortgage Opportunity this summer.
CW Realty countered the foreclosure attempt by suing the lender last week, alleging that the process should not move forward because the lender unlawfully interfered with CW Realty’s refinance attempt to “wrest the property from [CW Realty] at a bargain-basement price,” according to the lawsuit. Invictus and its attorney did not immediately respond to requests for comment.
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The lawsuit also stated that the lender scheduled a UCC foreclosure auction “that is commercially unreasonable, in bad faith, and only in its interests.”
In response, state Supreme Court Justice Barry Ostrager issued a stay and ordered the lender to show grounds for its foreclosure action. The court scheduled a hearing on Jan. 5.
Allen Schwartz, an attorney representing CW Realty-owned entity 187 Kent LLC, said he believes that “Invictus is millions of dollars off in the amount it seeks” and will present CW’s case at the January hearing.
Invictus has also pursued foreclosure on the property based on the defaulted $78 million mortgage loan. To counter that, CW Realty on Sept. 17 filed a hardship declaration, a measure under the state’s commercial eviction and foreclosure moratorium to stop certain commercial real property mortgage foreclosure actions from moving forward until Jan. 15, 2022. But after more than a month of silence, the judge on the case ultimately sided with the lender and appointed a receiver.
CW Realty appealed the decision, and an Appellate Division judge issued a stay. The court scheduled a hearing for Nov. 15.