Avi Philipson’s Paragraph Partners wants out of its deal to acquire bankrupt Brooklyn landlord All Year Holdings’ massive rental portfolio.
Earlier this year, All Year agreed to sell over 100 properties — mostly walk-up apartment buildings Bedford-Stuyvesant, Bushwick and Williamsburg — to an investor group that included Philipson and Rubin Schron’s Cammeby’s International Group for $60 million. If approved, the deal would have allowed All Year to exit bankruptcy after years of financial distress.
Cammeby’s Ruby Schron
But in the past few weeks, Philipson’s Paragraph Partners and All Year have accused each other of failing to hold up their end of the bargain. All Year claims Paragraph is refusing to provide extensions to close the sale, while Paragraph contends that All Year is withholding funds.
Now Philipson’s group wants to terminate the deal, demanding that All Year return its funds held in escrow, according to filings in bankruptcy court.
If the deal falls through, it would be a major blow to All Year Holdings. Finding a new buyer for the sprawling portfolio will be more difficult than ever amid higher interest rates and a more uncertain macroeconomic environment.
Led by Yoel Goldman, All Year became one of the largest rental landlords in North Brooklyn, focusing on both small projects and large ones, like the 900-unit Denizen in Bushwick, the trendy William Vale hotel in Williamsburg and the Dean at 608 Franklin Avenue in Crown Heights.
Goldman’s real estate empire was built with cheap financing from the Israeli bond market. But All Year began missing payments to bondholders in 2019, and lawsuits and foreclosures piled up. Restructuring officers took control of the company, while Goldman remained its largest shareholder. In December, All Year filed for Chapter 11 bankruptcy.
The firm tapped Meridian Capital Group to find a buyer for its 100-plus asset portfolio, but excluded the William Vale hotel and the Denizen. Philipson, the son of controversial nursing home magnate Bent Philipson, offered $40 million in cash and $20 million in promissory notes for the equity interests in the portfolio.
In May, Philipson agreed in a separate deal to buy All Year’s controlling stake in the William Vale hotel. That deal quickly ran into trouble.
Goldman’s co-developer on the William Vale, Zelig Weiss, who had also been fighting for control of the hotel, sued All Year in July, claiming the deal with Philipson was invalid. To make things even more confusing, the bondholders put the All Year entity that controlled the hotel into bankruptcy.
Philipson and All Year reached a settlement on the botched William Vale deal. The terms of that settlement have not been disclosed.
With or without the William Vale, Philipson was still on his way to becoming a Brooklyn macher; Paragraph Partners’ deal to acquire the rest of All Year’s portfolio was supposed to close in the coming months.
But cracks in that deal started to appear in recent weeks.
“The market for the financing that [Paragraph Partners] anticipated obtaining both to fund its obligations under the investment agreement and to refinance the property-level mortgage debt has become increasingly uncertain,” Paragraph Partners’ lawyer wrote in a filing earlier this month.
Still, the attorney wrote, “the sponsor has remained and remains interested in acquiring the debtor.”
All Year, however, claimed Paragraph Partners breached its investment agreement when it would not agree to extend deadlines for the bankruptcy plan confirmation and closing of the sale. Paragraph Partners also failed to execute its settlement agreement over the William Vale hotel, All Year claimed.
Any further delays, All Year’s attorneys wrote in a filing, would damage its relationships with its lenders and partners and “jeopardize the debtor’s ability to maintain its operations and manage its portfolio.”
Paragraph Partners shot back, claiming it provided extensions on its deadline and that All Year misled it about the proceeds from a legal settlement tied to a Williamsburg property.
This week, Paragraph Partners sent a letter to the court claiming it wanted to terminate the deal. Some of All Year’s property entities are now default on mortgage loans and risk foreclosure, it said. It also claimed that entities tied to some of the properties had transferred tenant deposits into different accounts in violation of New York state law. All Year has yet to file a response to Paragraph Partners’ claims.
All Year and Philipson did not return requests for comment.