Torchlight scores win to foreclose on Fifth Avenue retail property
Judge denied Harbor Group’s motion to dismiss lawsuit
Harbor Group International is one step closer to losing its Fifth Avenue retail property.
A New York Supreme Court judge denied Harbor Group’s motion to dismiss a lawsuit from Torchlight Investors, giving Torchlight the green light to proceed with a foreclosure on the retail space at 445 Fifth Avenue.
Harbor Group has been battling the foreclosure for over a year.
Canadian bank CIBC initially filed a lawsuit in September 2020, alleging Harbor Group defaulted on its $40 million loan and failed to keep the minimum reserve balance. Torchlight’s debt fund then purchased the loan from CIBC in March and replaced the bank as a plaintiff in the suit.
Torchlight alleged it was owed additional money from Harbor Group, including over $1.4 million for making “protective advances” to the property’s temporary receiver.
Harbor Group in September filed a motion to dismiss, alleging the mortgage was improperly assigned to Torchlight and the assignment was not properly acknowledged.
The judge’s ruling all but ends Harbor Group’s glimmer of hope it could save its property through the legal system.
“Documentary evidence does not establish irrefutably plaintiff (Torchlight) was not the holder of the note when the action commenced,” wrote New York Supreme Court Judge Francis Kahn.
Harbor Group now has to ink a new deal with Torchlight or lose the property to foreclosure.
The firm bought the retail portion of the 33-story Fifth Avenue condo tower in 2015 from Thor Equities for $68 million.
In 2020, the Australian firm Brickworks signed a 10-year lease to occupy most of the property. The retail corridor was previously leased to jewelry store Charming Charlie, which filed for bankruptcy in 2017 and again in 2019.
Manhattan-based Torchlight, led by Daniel Heflin, has about $5.1 billion of assets under management and specializes in distress debt, according to its website.
In January 2021, the firm took control of a 44-story Times Square hotel after the owner stopped making payments on its mortgage. Torchlight also attempted to foreclose on a hotel in Miami’s Brickell area. The hotel owner, however, declared bankruptcy and was able to resolve the dispute.
An attorney representing Torchlight did not return a request for comment, nor did an attorney for Harbor Group. Both companies also did not return a request for comment.