Apartment landlord involved in family fight files for bankruptcy
William Koeppel blames foreclosure attempt, J-51 lawsuit
A Turtle Bay apartment building has long been a battleground for landlord William Koeppel. Now it has forced him to file for bankruptcy.
Koeppel, who is in the middle of an ugly legal fight with his family over a separate portfolio of multifamily properties, is seeking Chapter 11 bankruptcy protection to fend off foreclosure at 350 East 52nd Street. The filing is for Eastgate Whitehouse, an entity tied to Koeppel that controls the 138-apartment building, known as Eastgate House.
In May, Wilmington Trust filed to foreclose on Koeppel’s $32.1 million mortgage on the property, which Barclays issued and assigned to Wilmington in 2018. According to court documents, Koeppel has not made monthly payments on the loan since Aug. 6, 2021.
The lender also accuses the landlord of improperly using revenue from the property to pay unrelated expenses, including car leases and meal expenses. Wilmington filed as trustee on behalf of holders of Wells Fargo certificates, which represent shares in the trust that holds the mortgage. The foreclosure case has been paused by the bankruptcy filing.
An attorney for Koeppel blamed the bankruptcy filing on the foreclosure attempt and an ongoing class-action lawsuit brought by tenants of the building. The 2011 suit alleged Koeppel overcharged on rent while receiving the property tax break J-51, which is supposed to trigger rent stabilization.
Last year, a judge ruled in favor of the tenants, reducing their rents. Koeppel is appealing the decision and has blamed his mother, Roberta, who previously managed the building, for applying for the tax break.
This is an example of the victims my mother leaves in her wake.
He argues that a 2008 settlement agreement involving Roberta makes him not responsible for any rent overcharges. As part of the agreement, Koeppel assumed his family’s control of Eastgate House but required that the trust overseen by his mother “hold [Whitehouse Eastgate] harmless against “any rent which must be refunded to a tenant because of an overcharge prior to closing.”
Koeppel said the stipulation was made because of a pending lawsuit against Tishman Speyer alleging rent overcharges at Stuyvesant Town. The 2009 decision in that seminal case, which determined that apartments could not be deregulated while the property received J-51 benefits, inspired a wave of overcharge lawsuits.
Koeppel alleges the 2008 agreement has not been honored.
“Roberta Koeppel entered into the J-51 tax abatement which in turn resulted in the depletion of resources available to maintain the building properly,” he said in a statement. “This is just another example of Roberta’s mismanagement and the victims my mother leaves in her wake.”
The bankruptcy filing estimates that Eastgate Whitehouse has liabilities and assets between $10 million and $50 million, and lists the mortgage as the largest of outstanding claims by creditors. It also lists a $3.4 million loan from William Koeppel and a $2 million loan from another entity tied to the landlord, which were used to make mortgage payments on the property.
This is not Koeppel’s first bankruptcy filing: He personally sought Chapter 11 protection in 2018. Around the same time, he challenged attempts by Solil Management to terminate his triple net lease at the East 52nd Street property. Solil alleged Koeppel violated the lease terms by failing to resolve sprinkler and sidewalk violations. The conflict has since been resolved.
The apartment building is separate from a trust that controls 13 other properties that Koeppel expects to inherit. He is suing to replace his mother and sister as trustees overseeing those properties, alleging that they have allowed the buildings to fall into disrepair.
He most recently alleged that some unauthorized disbursements were made from the trust and could render him liable for hefty taxes and penalties.