Toby Moskovits’ fight over control of The Williamsburg Hotel is finally over.
Quadrum Global officially closed on its acquisition of the 147-key luxury hotel for $96 million, appearing to end one of the most heated New York City bankruptcy battles in recent history.
A bankruptcy trustee selected Quadrum as the buyer in January after A&G Real Estate and Eastdil Secured began marketing the property in July. Given how the bankruptcy process has played out, there was no certainty the deal would close anytime soon.
The Williamsburg Hotel, with its rooftop pool and views of the Manhattan skyline, was Moskovits’ Heritage Equity Partners marquee property. But as Heritage faced lawsuits and a foreclosure attempt by its lender Benefit Street Partners, Moskovits put the property into bankruptcy in White Plains in 2021.
Benefit Street’s lawyers argued Moskovits’ group had siphoned money out of the hotel. Moskovits and her business partner Michael Lichtenstein denied the allegations and claimed their lenders, which also included Fortress investment Group, were predatory.
An independent examiner was eventually appointed to review the debtor’s transactions, where it looked through 50 bank accounts and over 10,000 pages of documents.
“The investigation uncovered evidence of a complex scheme to divert and siphon substantial amounts of money from the debtor,” the report stated, pointing to $12.5 million in funds distributed to entities controlled directly or indirectly by Moskovits and Lichtenstein.
Lichtenstein countered, claiming the examiner was a “passionate advocate” of Benefit Street Partners.
But by the summer of 2022, the bankruptcy judge, Robert Drain, said the debtors’ principals simply could not be trusted.
The record “shows a series of serious and I believe willful failure to disclose and appropriation of assets that are — that should not have been undertaken by the fiduciary” said Drain at a hearing. “At times, some of those actions also appear to me to rise to the level of fraud.”
A trustee was appointed to oversee the hotel, but Moskovits and Lichtenstein did not end their legal fight. They continued to argue that the hotel’s trademark, along with its slogan, “Sleep With a Local,” are owned by Moskovits. The trustee has refuted these claims.
A judge also found this year the accountant at the property, Daniel Norensberg and his Long Island-based accounting firm, were in contempt for failing to comply with subpoenas to produce information about the bankrupt hotel’s affairs.
The acquisition further solidifies Quadrum’s push into New York. The firm, led by Oleg Pavlov, also owns the Arlo Midtown, Arlo NoMad and Arlo Soho boutique hotels in Manhattan and recently opened the Arlo Wynwood in Miami.